Set this against Apple’s mind-bogglingly greedy and evil new Eula for iBooks, and it couldn’t be clearer what the ultimate stakes in the smartphone wars are.

Even in the short term, CynogenMOD’s numbers, and the plan for the Underground Market, and the wideapread revulsion against the iBooks EULA are a big deal – they’re going to crank up the pressure on cell carriers and various other malefactors in interesting ways. But maybe the most important thing CyanogenMOD’s numbers tell us is that there is, in fact, a mass market for freedom.

Lots of people, including all the world’s Apple apologists, contend that it isn’t so. They insist that almost everyone is actually contented and better off in walled gardens – that the only people who care about software and device freedom are a tiny fringe of grognards. A million installs are now saying “Fuck that noise!”

Objectively, a million isn’t greatly different from 900K – and it’s only one percent of even the U.S. smartphone userbase. Still, “million” is an important psychological threshold. It’s where marketers and product planners and even politicians start to take you seriously. And it won’t stop there; a million installs recruited without marketing and in the face of the effort required to install CM means we can expect strong endogenous growth in the future.

About a million people – actually, when I checked just now, it was 1,096,279 – have said “Enough!”. They’re not even willing to tolerate even the relatively light restrictions of carrier Android, let alone Apple’s beautifully-decorated jail cells. A million people!

This renews my hope – not that I was feeling defeated before, mind you, not with Android probably reaching simple majority market share right about now. But it’s always nice when reality confirms that the downshouters and control freaks and MAAFIAAsi and glassy-eyed evangelists for the Cult Of Steve Jobs Or Someone Like Him are wrong. Hugely, desperately, finally wrong. There really is a market for liberty out there; it’s vast and it’s growing. This genie is not going to be stuffed back in the bottle.

503 thoughts on “The Smartphone Wars: CyanogenMOD Rising”

You do know that a million installs or downloads are not a million users. Many appologists will talk down this number into insiginificance (its only 10K nerds that each installed CM 100 times). But I agree it is a milestone and it has marketing significance.

The real importance is the old saying “The first million is hardest”. The second million will be relatively easy. At 7K installs a day (the stats for the last 24 hours), they should reach the next million before the summer.

>You do know that a million installs or downloads are not a million users.

I actually don’t think the ratio is far off 1:1 in this case. I’m pretty hard core and have owned three Androids and even I’ve only installed CM once, on my G-1. Where, I might add, it ran like a rocket – it was better and faster than the stock 1.6 build it replaced.

>The real importance is the old saying “The first million is hardest”.

And this is undoubtedly true. Phenomena like CM tend to have geometric growth above a certain reservoir level – it’s a lot like the statistics of infectious diseases. Well, except this infection is of wellness rather than illness.

> You do know that a million installs or downloads are not a million users.
I’m pretty sure that installs on the same device are only counted once… I’m not sure where I read this but hopefully I’m prompting someone to confirm or refute it!

Nice article, esr. I just love CM too. Not just because of the freedom from carriers and walled gardens but also for the freedom from the phone manufacturer too. Having underestimated my use for a smartphone some years ago (I figured I’d just make calls, and boy, was I wrong) I settled for a lowly HTC Tattoo with Android 1.6. With the manufacturer never bothering to update the OS, I turned to CyanogenMod and have enjoyed the latest Android ever since (that is, till v.4 was released). So no questioning the value of alternative firmware on the smartphone.

I’ve had similar experience with other gear as well, most notably with wifi routers. In my experience the alt firmware community has consistently provided better firmware than the manufacturer for these routers. I have a feeling this is because a) the manufacturers are more preoccupied with product manufacture and are too stretched to apply the same effort to their firmware, and b) the alt firmware community have the combined strength of more eyeballs in developing and testing software and sheer hacker enthusiasm for extending the use of any given product. I don’t think your average manufacturer can match these strengths and hence the rising star of CM, dd-wrt and a host of other hacker communities.

With regard to the Cult of Mac I share your aversion to walled gardens of the sort that Apple has built and have always opted for the product that offers more choices in how I want to use it. However, I do appreciate the fact that Steve Jobs and Apple have raised the standard for product design considerably (I recall the days of the fragmented mp3 player market when almost every single product would qualify in the category of crapgadget today). I think the quality we enjoy in today’s non-Apple products owe a lot to Apple.

So my wish is that Apple continue to raise the standards, but not become all encompassing, and that other technologies like Android rise to those standards, or better, exceed them in the years ahead. And as for the hacker community that brings us CM and dd-wrt, it’s only going to get better.

@pdwalker Do you give credit to each entity which incrementally raises the bar? Apple didn’t invent smartphones, they didn’t invent touchscreens (I had a touch-screen smartphone with downloadable apps back in 2002, it was clunky and needed a stylus for accurate input, but it was a smartphone and I had it before the ipod did away with it’s mechanical scroll wheel). What Apple did is take old technology, made it shiny, and marketed it really well.

Apple in the 80s and 90s innovated, not everything was good, but that’s what innovation is about, trying new things and seeing what works. Once Jobs returned he killed everything innovative and went with the shiny turd principle.

I HATE HATE HATE my Samsung Galaxy S. It’s a f’ing piece of shit. If I wasn’t out of this country and back to civilization in 10 months…

502 Bad Gateway

cloudflare-nginx

Oops.

But seriously, calling the Apple EULA “evil” and “greedy” when (a) the percentages are (according to some who’re in a better position to know) industry norm to outrageously good, and (b) it’s no where near real evil (I know real evil. I’ve run servers in it’s former palaces. I’ve got friends who shat in it’s golden toilets. To even think of calling Apple’s tool “evil’ diminishes all sorts of real evil.

Fuck man, even Joe Paterno is more evil than Apple’s EULA. At least most of Apple’s users are consenting adults.

@William O. B’Livion
“calling the Apple EULA “evil” and “greedy” when (a) the percentages are (according to some who’re in a better position to know) industry norm to outrageously good, and (b) it’s no where near real evil”

There is always a boss to a boss (Dutch proverb), even in evil. That is not an argument.

Your point a) has been beaten to death by the Apple appologists and is fake and devious. This is EXACTLY the same as MS putting these conditions on MS Word/Excel/Frontpage

What is evil of Apple is that they cut 70% from what you earn AFTER you and others have done all the work to get the book sold. Apple does not do the writing, editing, lay-out, design, publishing, advertisement etc. They just wrote the editor program.

It seems to me that CM is in Google’s interests, and possibly in the handset manufacturers’ interests but not in the carriers’ interests. Since Google has ceded quite a lot of power to the carriers, you can bet that they will intervene if the CM install base ever exceeds some arbitrary (probably low) level. If everyone starts to install CM on Verizon phones, Verizon will promptly 1) make technical and legal interventions against CM directly, and 2) lean heavily on Google to stop them from helping Cyanogen out.

One nice thing about Apple’s model is that the carriers have almost no leverage. The interests of customers align with the OS maker and the handset maker much more often than they align with the interests of the carriers.

But even in Apple’s case, you see some carrier intervention, and it almost always makes the phone worse. Carrier ID (in earlier models) and carrier-disabled tethering come to mind.

“On the other hand, the work is my own. I’ve been told by a publisher that they want a second edition of one of my books. Their conditions on me are that I drop this series of ebooks I’m working on because it might compete with the title. When I said no they responded that that’s ok they’ll just get someone else to revise my book.

My book.

It’s not really mine. Even though the copyright is in my name, that turns out not to mean very much.”

As I’ve said, I think it’s a rather stupid provision, but all the hyperventilating is worse.

@Winter: It’s only the same as MS etc. if they GIVE you the software, and YOU STILL HAVE A CHOICE.

I know this is difficult for Europeans to understand, after all just about anybody left over there capable of making choices immigrated elsewhere by the 1960s, mostly infecting the US with their desire to hand off to the government responsibility for everything in their lives, but YOU HAVE THE CHOICE.

Apple isn’t a *good* company, and I’ll bet Ballmer is kicking himself right now for not putting those kinds of conditions on Microsoft Development Products (does Apple put that sort of condition in their compiler/library EULAs?), but Evil?

There’s a pool in a run down palace outside of Baghdad that has never (that we know of) been filled with water. The walls are stained brown with blood and brains. There are ponds in the Baghdad area that the US was afraid to drain because (it was rumored) of what they contained (and it wasn’t WMDs).

Those things are evil.

Starving two or three generations of “your” people because you’re a fucking nutbag. that’s evil.

Giving folks the choice to sell their shit though Amazon, or use your nifty software? That’s no evil, that’s inane.

Obviously Apple didn’t invent those technologies, but they were the first to make them truly usable. I rkieemember the “smart” phones of the time, and the best that I could say about them is “an interface that not even an Engineer could love”. Really. They were bad. Craptastic!

I hung onto my old dumb Nokia phone for years because as a phone, it was simple and just about perfectly intuitive. The earlier win phones? Symbian? Others? They were horrible. Even the hardware was ugly and clunky. Improving, but still ugh.

Then Apple came and changed the game completely. They set the bar so far above the “smart” phones of the time that everyone else had to struggle to catch up.

Now we have have a plethora of smart phones that are better, much better, because they at least have to try to match the standard set by Apple. For this, I am grateful for what Mr Jobs has accomplished. No, he didn’t invent any of those technologies, but he sure packaged in them in a way that no other manufacturer had done before.

Look at the wealth of options we have now. Now compare that with… 6 years ago. And that’s not just because of Moore’s Law.

@William O. B’Livion
I know this is difficult for Europeans to understand, after all just about anybody left over there capable of making choices immigrated elsewhere by the 1960s, mostly infecting the US with their desire to hand off to the government responsibility for everything in their lives, but YOU HAVE THE CHOICE.

I’m not sure what the gratuitous swipe at Europeans was for. Plenty of us over here are all in favor of choice. For example there’s an entire open android phone, the geeksphone (http://www.geeksphone.com/en/ ), made in Europe by people who want a choice. I’ve got a geeksphone. I need to put CM on it because the stock rom annoys. But the stock rom is good enough for what I need most of the time (it comes rooted which makes things simple) and I don’t have the time to start back at 0 again with CM.

I think people are looking at this iBooks author thing all wrong. It’s not meant to be a stand-alone general-purpose book publishing tool. It’s not ‘MS Word for ebooks’. It’s specifically intended as a front-end to Apple’s iBook store and the iPad. And that is very much how it was presented in Apple’s press conference. You should look at it as being the author’s front-end to the iPad sales channel. And if Apple wants to create a piece of software to do that then they have every right. I don’t know that this effort to break into textbook publishing is going to be much of a success for Apple, but to call it evil is ridiculous.

If you find a publisher willing to sell your book, and they work on it with you and promote it through their channels then *of course* they are not going to want you to sell it elsewhere! That is how you should look on the arrangement with Apple. They agree to provide you with help making your book (iBooks Author) and with selling and promoting it (the store and their installed base of iPads) and in return you give them exclusivity and a cut of the profits. That’s how it has always worked.

And as for one million installs of cyanogenmod indicating a widespread embracing of free software, I find this to be absolutely laughable. First of all, as others have pointed out, an install does not equal a user, no matter how much you “don’t think the ratio is far off”. But even if it did, according to Gartner there were 461M smartphones sold last year alone! What is that? Something like 0.2% of users with cyanogenmod, even assuming an install equals a user?

This only confirms what should have been obvious all along: normal people are never going to be interested in putting a different operating system on their phones.

HOME AND STUDENT SOFTWARE. For software marked “Home and Student” edition, you may install one copy of the software on up to three licensed devices in your household for use by people for whom that is their primary residence. The software may not be used for commercial, non-profit, or revenue-generating activities.

I own a G2 and run CM7. The default Android install on that phone really isn’t all *that* bad. But I wanted freedom (starting with root, but not ending there), and frankly, the better software that comes with freedom.

Counting the time and energy I spent in researching the process, downloading all the software tools I needed for the process, finding and studying the best docs… and then actually rooting my phone and installing CM7, that CM cost me a fair chunk of change. And it was worth it.

>And as for one million installs of cyanogenmod indicating a widespread embracing of free software, I find this to be absolutely laughable.
>First of all, as others have pointed out, an install does not equal a user, no matter how much you “don’t think the ratio is far off”. But
>even if it did, according to Gartner there were 461M smartphones sold last year alone! What is that? Something like 0.2% of users with
>cyanogenmod, even assuming an install equals a user?

Look at the flip side of that. At present, it takes enormous dedication to even make something like CM possible and installing it involves surmounting a number of difficult obstacles. And even with all the difficulties involved, large numbers of people still do it. Imagine if it weren’t so hard, how many people would do it. Would want to do it.

>This only confirms what should have been obvious all along: normal people are never going to be interested in putting a different
>operating system on their phones.

How exactly would you know? Lower the barriers to doing so, see what happens and then you might be able to make that conclusion. We know that if you make something as easy as tinkering with your FB profile, then hundreds of millions of people will discover they are into freedom and “customization”.

I have got nothing against CM at all. They have obviously created something that appeals to a certain niche group of people and fills their needs. Fantastic. Well done to them and I wish them all the best. If I ever bought an Android phone I might have a go at playing with it. I have nothing but respect for anybody who takes on a technical challenge like that and succeeds.

However, it is rather silly to extrapolate from the enthusiasm of a small group to the conclusion that custom mods are going to have mainstream appeal.

@pdwalker I disagree. The treo was pretty nifty for its time, true windows phones sucked (but, to be fair, they still do), as did many others of the time, but by no means all of them did. Apple really didn’t make it “truly usable” as you put it, they slightly raised the bar. I’ve used iOS, I think it sucks, and I’m fairly sure it was significantly worse back then. Additionally the first iphone was incredibly outdated as a phone when it first came out (it only had EDGE data), there were no extra apps available (which Palm had had for years and blackberry was beginning to, even regular phones could download games at this point), and god the on screen keyboard was horrid. The only thing it really did was raise public awareness of smartphones on the back of Apple’s famous iPod line (it’s an iPod with a phone, yay!). At the time I was rather unimpressed with it given the hype and media attention it was getting.

I’ll give you that the original iPod was a huge leap forward from existing mp3 players at the time: massive space, easy to use interface, I wanted one, but not enough to shell out the megabucks for it. Since then the iPod line has simply progressed incrementally, there hasn’t really been any huge leaps except, perhaps, the click wheel. Each step of the way I thought “it’s getting better, maybe the next one will be good enough”, it never was (though the touch came close when it was first released, but it came out too late). Color was an obvious next step, then adding photo capability and a way to display that on a TV screen. Though Jobs initially resisted, video was an obvious next step, as was adding a touchscreen (albeit somewhat unnecessary if not for the phone capability), and reaching back several years to when smartphones were originally gaining popularity they added that and, as I said, a crappy, outdated one.

Every new advancement Apple makes is either obvious, stupid, evil, or some combination. Recently they’ve been leaning more towards evil.

Perhaps I was just spoilt by the Apple of the late 80s and 90s, my friend got a Newton, it was awesome (to my 11 or 12 year old self anyway), he also got the original Quicktake 100 which, again, was pretty amazing. When my brother started college my Aunt gave him her old PowerBook Duo, that was pretty cool too.

After Jobs returned, though things slowly went downhill. First they released the iMac, unexpandable, not backwards compatible with any existing peripherals without third party solutions, added this newfangled connector which was significantly slower than SCSI and required you buy a hub to hook up more than one peripheral (other than the keyboard and mouse, hard drives couldn’t be daisy chained), it removed all removable storage medium (ie floppies) replacing it with the read only CD-ROM, it was a big f-you to all existing Apple users. Yes, the addition of USB was quite insightful, early editions were incredibly slow, however. For years there was still no way to transfer files between computers without buying an external floppy drive or purchasing an expensive alternative (zip, CD RAM, or magneto-optical). USB was still too slow to transfer video (Mac was a huge video editing platform at the time), so they eventually added firewire. And soon after the iPod, their last major advancement, though you still can’t really call that an innovation, they just took what existed already (mp3 players) and significantly raised the bar. After that, nothing.

It is amusing the read the immature and uninformed comments on Apple. Pretty much everything you StarkRG in particular says is wrong. Android is obviously a copy of iOS and Apple dramatically raised the bar for what is expected of a smartphone. The rest of his comments are so silly as to not be worth commenting on.
For everyone whining about iBooks you better be whining about Amazon too because they do exactly the same thing and also have a 30% rate.
Apple has created the authoring tool, the storefront, and the devices. The gall of them not to give it all away free..
The real story here is that most Android devices out of the box require something like CyanogenMod to be usable without all the garbage Google has allowed the carriers to foist on their users. The same garbage that Apple does not allow the carriers to dictate.
Oddest of all are Google fans decrying Apple as “evil”…OK then..

Really? Traditional ink-and-paper publishers don’t charge their customers a $600 get-in-the-door fee. An exclusive contract with one of them is acceptable because they have access to several sales channels: chains, independents, Amazon, etc.: readers are offered your book for sale in a multitude of ways, so the issue of exclusivity is minimized to the point of irrelevance. This EULA is more like signing an exclusive contract with a book club. An expensive book club, at that.

What of all your potential customers who chose B&N’s Nook or Kobo’s Reader over the iPad? They’re also ePub devices, but you can’t offer them the same file: you’ll have to rip out the text and create a new one (of course, since the argument is that that’s hard without Apple’s “help”, you’re basically saying, “Screw ‘em”). How do you prove to Apple that it wasn’t created with their software? At what point, given you’ll want to keep much the same typesetting, does it become a different file anyway? ePub is just zipped XHTML and CSS: there’s not a lot you can change. Remember when SCO claimed Linux contained their code because the header files were the same? Are we going to see literary authors facing similar arguments?

“Evil” might be hyperbole, but this only confirms what hs been obvious all along: Apple keeps pushing its luck, and can still find fans to defend it.

Linux is a perfect example, yes! How many people put linux on their PCs? Very very few.

Obviously Linux is dominant in technical areas like servers and supercomputing, but no ordinary users are putting linux on their computers to replace Windows or Mac OS. Only geeks do that. We are going to see exactly the same situation with phones.

And, again, this is not to ‘belittle’ the achievements of the linux kernel developers, who are no question some of the best programmers around. I use Linux sometimes myself, and it’s great.

However, it’s just not ever going to be a mainstream thing to replace vendor-supplied operating systems with free software.

Firefox is entirely different because it is an application. People put apps on their phones and computers all the time. What I am saying is that people do not generally replace their OS with something they downloaded from the net. Just doesn’t happen outside of geeky circles.

” USB was still too slow to transfer video (Mac was a huge video editing platform at the time), so they eventually added firewire.”

Yes the Mac was huge in video, the iMac not quite so much. You had all the other options you wrote about with the other Macs.

And if you think Apple was good in the 90’s, well, perhaps your age at the time colored reality a bit too much. The mid 90’s were a horrible time to be a Mac user. The OS was horrible, the hardware tepid, and Apple was rudderless.

” For years there was still no way to transfer files between computers without buying an external floppy drive or purchasing an expensive alternative (zip, CD RAM, or magneto-optical).”

Hmm. Even the lowly iMac had an ethernet interface. So I guess you couldn’t use Appletalk, nor FTP to transfer files.

And Firewire, though it could act in an ad hoc role for file transfers was really aimed at replacing SCSI.

I would suggest thinking carefully before concluding that Apple’s model doesn’t give the carriers any leverage.

For instance, you might want to consider the 4 (or more, since Apple has been signing up regional carriers) different kinds of iPhones (not counting model variations) you can buy in the US (and that you don’t avoid the limitations of some variants by paying full price). You also might want to think about the special kind that can only be bought at an Apple store and why Apple only started selling it in the US last year. You could also ponder the unusual (possibly unique among GSM smartphones) carrier-favoring feature that the AT&T iPhone has had since the beginning. You might even ask yourself if there are any practical difficulties using iPhones on different networks in countries where mobile phones are required by law to be sold unlocked.

But I suppose none of those things favor carriers over consumers (especially when compared to alternative smartphones), since Apple’s model doesn’t give the carriers any leverage.

Half the smartphones run Linux. But everyone and there uncle told me it was a nerd’s thing bound to fail.

You’re missing the point. I am saying that normal users are not going to change the system their device (PC or phone or whatever) comes with. They are not going to change from the vendor-supplied OS. It doesn’t matter whether the supplied OS is linux, Mac OS, Android, or Windows. The point is that it just doesn’t occur to people to download a new OS and put it on their device. Especially some weird thing from the internet made by a bunch of nerds (that’s not me talking, that’s how normal people think about it).

And did you ever try to explain J Random Windowsuser the difference between an OS and an Application?

Most people don’t even know what an OS is! They don’t have to. People know they can add things called programs (or ‘apps’ in the modern parlance) to make their computers do more stuff (or do the same stuff better). To most people there is no such thing as an OS. To them ‘Android’ is just part of the phone. They are no more likely to think to change the OS than they would be to change the 3G radio. It’s all just ‘the phone’.

“Set this against Apple’s mind-bogglingly greedy and evil new Eula for iBooks…”

Call it “mind-bogglingly greedy and evil” if you want, but this is not the EULA for iBooks. It is the EULA for the new app, iBooks Author. iBooks (the app) takes standard ePub (as well as the new proprietary format and a few other things).

Let’s be fair. After all, CM now has (pinky to corner of mouth) one million users!

Modded smartphones are going to occupy the same cultural niche as modded game consoles, the only difference being that modding cellphones is less explicitly illegal.

Geeks and pirates will do it. Everybody else won’t touch it. If they by chance do come into ownership of a modded cellphone, it’s because they bought it secondhand from a shady character or one of their buddies. They love that their experience is vendor-curated. They put their faith in the vendor to protect them from viruses and other nasty things that might go wrong. The hokey adspeak bromide that “you’re not just buying a phone, you’re buying an experience” is literally true: the determiner of platform adoption is how much good stuff is available for the platform (and, contrariwise, how little crappy or malicious software), and this is as true for cellphones as it has been for game consoles.

If their vendor is Apple, they’ll always get a fresh OS release too. Anybody else, and they’ll be lucky to be running the OS from a year ago.

I agree that this is a good thing. Unfortunately, it isn’t happening in a vacuum. There is technological freedom, which CyanogenMOD represents, and then there is political freedom. Your freedom to operate your own software is trumped by the government’s “freedom” to put a gun to your head and tell you what to do. After Obama is reelected by a hate campaign against Republicans, he will continue that hate campaign into passing laws to restrict the rights of the despised GOP, starting with universal gun confiscation and ending with their literal extermination.

If you think I’m exaggerating, look at the way David Brin made RAH’s support for gun rights “didn’t happen.” Effectively, Brin wiped history and changed it.

*Being able* to put cyanogen mod on my phone is much the same as *being able* to fork python. It is most unlikely that I will ever consider doing so, but the fact that I (or the multitudes that use python) *could* is one of the things that makes it unlikely.

So long as the stock phones are mostly tolerable, few will go to the trouble to put a different os on them. But, the ability to put a different os on my phone limits the degree to which the carrier can be obnoxious before a significant number do start installing something else.

If there were a lot of people installing cyanogenmod on the nexus S, some of them would have done an install package that made it simple and reliable. I might well be one of those that works on such a setup in that case.

The fact that I *can* makes it much less likely that I will ever need to.

Phil: I don’t buy into Alex Jones’s crap. The Left encourages people to have as many conspiracy theories as possible, so that the truth will be buried in a huge pile of absolute bullshit. That’s why the very real possibility that Oklahoma City had input from the Clinton administration are now off-limits, since on the surface they seem like the 9/11 Truth movement.

Of course, the 9/11 Truth movement says that a huge number of people planted explosives in the busiest city of the world without being detected, and nobody ever said a word about it. Meanwhile, the OKC skeptics merely suggest that since it’s an established fact that Timothy McVeigh was in a neo-Nazi group with Andreas Strassmeir, who was also a government agent with ties to Clinton’s Secretary of State, that there may well have been suggestions made in order to help both Clinton’s reelection and his anti-gun totalitarian agenda.

It’s utterly ridiculous to think that a huge conspiracy could go undetected. It’s also ridiculous to think that no accusation against the saintly government could ever be true.

The one million installs may be offset by people installing it multiple times. I for one have installed it half a dozen times on various devices. However what this doesn’t account for is all of the other ROMs out in the ecosystem right now. Unfortunately cyanogenmod doesn’t support my current phone yet, Samsung Galaxy s2 Tmobile variant, so I am using the Juggernaut rom. There are many other bloatware free roms out there floating around. I agree that bloatware is going to continue rising as an issue. If you don’t believe it, just take a look at the reviews on “411 and More” which comes on the Samsung galaxy s2 and cannot be uninstalled without rooting.

@Shawn Good point which I can back up. I either count as a single Cyanogen user or as fifteen or so, which is the number of times I installed various versions of the nightlies on my device.

There are some good points in the previous posts. The reason more users don’t make use of custom rom’s is that they are (for the typical user) not easy to install. My favorite is the rom forum page (forget which rom) where the text for the download link is “PLEASE BRICK MY PHONE”. That’s just the rom developer protecting him/herself. But it is scary to a novice.

The rom community is getting closer to a “one-click” solution. If it were to ever happen, I would predict a drastic rise in the number of users making use of custom roms.

apple crushes it:
The Company sold 37.04 million iPhones in the quarter, representing 128 percent unit growth over the year-ago quarter. Apple sold 15.43 million iPads during the quarter, a 111 percent unit increase over the year-ago quarter. The Company sold 5.2 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 15.4 million iPods, a 21 percent unit decline from the year-ago quarter.

I am frankly surprised that rooting phones and playing with custom ROMs is not more widespread, especially among tech-savvy Millennials (those who are not hard-core geeks).

When some co-workers expressed interest in Android phones and tablet, I brought in my Android phone (rooted, running a custom ROM) and B&N Nook Color (rooted, running full-service Android from custom ROM) and showed them off. I was surprised that none of the people who swore by smartphones and iPads was interested in doing it themselves, or viewed it as a “normal” thing to do.

I even got comments from them afterward that made me sound like some of hacker goddess. I mean, c’mon, I didn’t write or port these ROMs! I just followed basic instructions from the web to install the products of other people’s hard work. Anybody can do this. But that’s not how it’s perceived.

The process of installing these is going to have to get much easier before we can get a true mass use of custom OS software on devices.

On the other hand, my iPhone and iPad eMail and browsers crash far too often to suit me. I can usually go right back in, but there’s a delay and the user experience sucks. I’m surprised they don’t have automated link following test robots for these things.

I have heard this argument about foo being too nerdy for the stupid masses. And foo is common practice now. From installing several browsers to high school kids with tor on an usb to thwart filters.

I guess if you consider Tor usage mainstream that explains why you think CM will go mainstream.

We could argue about this forever, but the fact is that the evidence is against you. Linux is the perfect analog, and it has been stuck at extremely low market penetration for end users for a decade, despite claims every year that ‘next year’ will be the year it breaks through. It never happened.

So far there is no evidence that phones are going to be any different, and the CM stats bear that out.

Aight, I’m going to squash the idea that the CM numbers might represent multiple installs right now. Look at the actual data, via the first link in Eric’s post. Notice it has Installs by Version, and that 7.1.0 (latest stable) is in the lead, followed by nightlies, and then on down. These numbers are produced from the opt-in reporting that is built in to CyanogenMod. That means that CM doesn’t have ~1 Million total installs over time, it means it has ~1 Million CURRENT installs. And that is only what is reported!

Look closer: if the numbers listed are high due to multiple installs on the same device, then you would not see the decline in usage from newer to older versions (that is, older versions would be artificially inflated to be much closer to the most-used version), and nightlies would absolutely dwarf every other version.

“In 2009, Apple sold more iPhones than it did in 2007 and 2008 combined. In 2010, Apple sold more iPhones than it did in 2007, 2008, and 2009 combined. Last year, Apple sold 93.1 million iPhones, slightly more than it did in in 2007, 2008, 2009, and 2010 combined.”

Thank goodness Linux exists, but it is engineered from the ground up for usage cases that are not everyday desktop cases. That’s what’s good about it, and it’s also what makes it completely certain that it will never break through to the mainstream.

Different tools for different jobs.

The only reason anyone would want Linux to have majority market share is that they were psychologically scarred during the Windows era, and they think that niche players will necessarily be eliminated, so we need some kind of one-size-fits-all operating system for every usage case. But I think that outlook has been completely repudiated by the rise of these tablet and smartphone OSes, each of which is succeeding commercially without needing to also be the OS people use for enterprise, for development, for creative arts, and so on.

I think one of the major pieces to the puzzle has been the emergence of app stores (starting first with Steam, and then the iOS app store). If you can get every piece of software for a give platform 1) immediately 2) cheaply and 3) without moving your body, then the downsides to being on a niche platform recede into nothingness. Does anyone seriously still think that Android or even Windows Phone don’t have enough apps? I doubt it.

“We could argue about this forever, but the fact is that the evidence is against you. Linux is the perfect analog, and it has been stuck at extremely low market penetration for end users for a decade, despite claims every year that ‘next year’ will be the year it breaks through. It never happened.”

Most of the people arguing that Linux would achieve breakthrough saw it reaching the point that it could easily be purchased pre-installed. Microsoft successfully fought back and that front and squelched every significant attempt to make pre-installs available through mainstream channels.

How many Windows users have ever installed Windows themselves, without assistance from a neighborhood techie? Darn few, I’d bet. And if you had to install Android yourself, the percentage of smartphones running Android would be in single digits, not approaching 50%. See my earlier post in this thread re: users reactions to installing custom ROMs.

This war was won (by Android) and lost (by Linux desktop) in the retail sales channel, not in the home or the minds of consumers.

How many Windows users have ever installed Windows themselves, without assistance from a neighborhood techie? Darn few, I’d bet. And if you had to install Android yourself, the percentage of smartphones running Android would be in single digits, not approaching 50%.

Exactly.

People just are not interested in installing new operating systems. They stick with what they are given. That’s what we learn if we look back at the last decade of personal computing. CM and the various other mods are well under 1% share of smartphones right now. *Maybe* they an get up into the low single-digit percentage points. One or two percent. That is where linux on the desktop is, and that’s probably the ceiling for CM as well.

And that would be an admirable achievement, but it’s a very very long way from being relevant to the mainstream.

One or two percent. That is where linux on the desktop is, and that’s probably the ceiling for CM as well.

And that would be an admirable achievement, but it’s a very very long way from being relevant to the mainstream.

As others have pointed out, at one or two percent, it is very relevant to the mainstream, if only indirectly. Would windows on small machines be as cheap if linux didn’t kick ass there first, even if only for a couple of months?

Is it that the Apple apologists and their kind think that everyone is better off with the restrictions and walls, or is it that you just can’t get through the density of formal business school educational clutter to actually see how to turn a profit off something that is completely open? Its pretty easy to see how Microsoft and Apple turn a profit. Google’s revenue stream isn’t quite as obvious let alone a company like Red Hat.

@Cathy – “I even got comments from them afterward that made me sound like some of hacker goddess. I mean, c’mon, I didn’t write or port these ROMs! I just followed basic instructions from the web to install the products of other people’s hard work. Anybody can do this. But that’s not how it’s perceived.”

Exactly. Therein lies the real issue with CM. These are the very same people who run IE on their laptops and desktops and roll their eyes when you mention Firefox or Chrome. To such people rooting their phones seems on the surface of it an order of magnitude more difficult. There are at least two generations out there for whom technological ignorance is a badge of honor the younger of the two still occupy many board rooms and senior managerial positions.

As others have pointed out, at one or two percent, it is very relevant to the mainstream, if only indirectly. Would windows on small machines be as cheap if linux didn’t kick ass there first, even if only for a couple of months?

I have no idea, but are you saying this is all about bringing the price of mobile OSes down? I thought it was all about freedom having control over your software. Whatever putative freedom CM is supposed to confer on its users isn’t going to matter to 99% of the people if they are not using it.

Apple sold 4.2 million iPhones into the Verizon customer base, accounting for more than half of the 7.7 million smartphones that Verizon’s customers purchased in the fourth quarter.

Restated, every single Android phone that Verizon sells — dozens of models — *combined* could not outsell the iPhone last quarter. When you consider that Verizon sells plenty of BlackBerrys (and a few Windows Phones here and there) as well, the situation is even worse.

Yes, this is just Verizon.

But seriously, Eric?If I were an Apple marketing guy, I’d be asking “How the hell can I compete against the EVO 4G with this?”

The business press had already begun to notice that Apple is chasing Android’s tallights. Then Apple announced the iPhone 4S, and it’s a big yawn. iCloud? Me-too voice recognition features? Really, Apple? Is this the best you can do? Gawker has a hilarious post on how overblown the media hype was, but even that fails to convey what a boring, derivative-seeming product the 4S is. How are the mighty fallen.

I have no idea, but are you saying this is all about bringing the price of mobile OSes down?

Not at all. That’s just one of the nice side effects of free software. Other OSes can only charge for perceived value-add.

I thought it was all about freedom having control over your software. Whatever putative freedom CM is supposed to confer on its users isn’t going to matter to 99% of the people if they are not using it.

The price of Android is already zero. The effect of CM on Android vendors will be that they have to loosen the reins in other ways than simply dropping the price.

You’ll have to wait until Apple’s userbase share and unit volume exceeds Android’s. They’ve got about 18% and 18 million users to make up, and despite the overall market slowdown Android’s lead in both share and volume is still increasing.

Apple is making potloads of money, but it still isn’t competing against Android smartphones very effectively. Which is why 4S still looks like a lackluster “me too” product, despite the predictable “ZOMG record quarter” stuff.

Users won’t be able to opt out starting March 1. Some people might be OK with this, I suppose.

From the article you linked:

“There is no way anyone expected this,” said Jeffrey Chester, executive director of privacy advocacy group the Center for Digital Democracy. “There is no way a user can comprehend the implication of Google collecting across platforms for information about your health, political opinions and financial concerns.”

I dunno what you guys are smoking. I already assumed google was doing this, but I guess the integration from all those disparate data sources was a lot of work. In any case, I fail to see either how “there is no way anyone expected this” or how you could have been dumb enough to think this wasn’t part of google’s endgame all along.

>I dunno what you guys are smoking. I already assumed google was doing this, but I guess the integration from all those disparate data sources was a lot of work. In any case, I fail to see either how “there is no way anyone expected this” or how you could have been dumb enough to think this wasn’t part of google’s endgame all along.

@esr> Apple is making potloads of money, but it still isn’t competing against Android smartphones very effectively. Which is why 4S still looks like a lackluster “me too” product, despite the predictable “ZOMG record quarter” stuff.

Apple sold more iPhones in calendar 2011 than in 2007 through 2010 combined.
55 percent of all smartphones sold by Verizon last quarter were iPhones.

Apple sold more iPhones in calendar 2011 than in 2007 through 2010 combined.
55 percent of all smartphones sold by Verizon last quarter were iPhones.

And they have the top three best selling phones, and they have the biggest profit share, and they have by far the best customer satisfaction record, and they are absolutely killing Android (even by unit share) in tablets.

Eric has heard all this before you fool! All that matters is OS user base share *on smartphones* (not tablets). All other measures are irrelevant.

According to Barclays analyst Anthony DiClemente, 5.5 million Kindle Fire units were sold last quarter, up from his initial estimate of 4.5 million units. All Things Digital, which obtained DiClemente’s estimate, was the first to report on the sales figures.

Apple has certainly managed to one-up Microsoft. Microsoft managed to suck all the profit out of a market, but never did so in a way that caused the PC vendors to have to take out loans in order to be able to sell the PCs. I suppose it seems to make sense to the carriers to subsidize the phones when interest carrying charges are so low.

I’ve been puzzling over carrier pricing/subsidies for awhile, and concluded that it is mainly a perceived value strategy. If the customer demands a new phone after two years, that’s possibly a money loser. But a lot of customers won’t be willing to spend the $200 for a new subsidized phone right away, and the way the carriers have it set up, the customer is overpaying for data after the contract ends and before he acquires a new phone. And even customers who do spend $200 for a new phone right away might give their old phone to somebody else, who signs up for a pricey data plan.

And, of course, the carriers probably expect (rightly or wrongly) that the average price of phones will drop, making hardware investments cheaper in the future. If (when?) the carriers drop the cost of a data plan, it’s hard to go back and raise it again. Better to keep the cost of the data plan artificially high and invest the surplus in convincing more people to get hooked on data plans via subsidies.

But Apple might throw a monkey-wrench in those plans. If the price of an Apple phone stays constant, and people demand new ones every two years, that’s gonna hurt. It will be interesting to see if Android phones actually start costing less than $0 (rebates) or if there is some fine print in the Apple/carrier contracts that prohibit this (another possible lesson learned from Microsoft…)

There’s an entire field between “Apple’s userbase share and unit volume exceeds Android’s” and “the precipitous decline of Apple share to ~<10% triggered or coincidentally timed with Android reaching 50% US market share (according to Comscore) which should have happened sometime in Q411 but didn't, and which is deemed a "zero sum game," even though it is not.

“I’ve been puzzling over carrier pricing/subsidies for awhile, and concluded that it is mainly a perceived value strategy. If the customer demands a new phone after two years, that’s possibly a money loser.”

I can’t remember where I saw it today, but there was a story where an analyst stated that the whole thing is definately a money loser. His remark was that, “The revenue pop is always a year away.”

>Yes. Which would seem to indicate that iOS chafes a lot more than Android.

>@Patrick — or that iOS users are more tech-savvy.

Or more likely than both, that it’s much easier to jailbreak your iPhone than it is to replace your stock android OS with CM (which it is).

>It is interesting that a million iOS users feel the need to break the jail that Apple fanboi tell us is so comfortable.

No more interesting than a million android users feeling the need to break the jails that android fanboys tell us don’t exist. Of course, one has to wonder how many of those million android users wouldn’t even need CM if the carriers and manufacturers would support and update their phones.

March 10, 2010 – “Notice the second-order consequences. Apple is going to collect the worst of both worlds – it will lose control of the app ecology and look overcontrolling and petty. Two lossages for the price of one! Next stage in the game is when somebody releases a must-have iPhone app that fights Apple’s business plan. Apple bans it. Then jailbreaking gets really popular. Hilarity ensues.”

15 billion downloaded apps later, this is veryyyy accurate.

April 5, 2010 – “I think the iPad is going to turn out to be another Newton, for reasons that don’t have a lot to do with the lock-in issue. Fancy, attractive technology but few use cases – early adopters will be all over it but it will fall just short along several dimensions of being the right thing.”

Yep, only 50million sold. Definitely another Newton-esque failure.

April 23, 2010 – “When Apple fails, empty bling is how it fails – and the iPad looks to me like an example, possibly a terminal one.”

Yep, the iPad is definitely bling that is terminal to Apple.

April 11, 2010 – “The fall of the iPhone has already begun.”

37 million iPhones sure seems like failure to me.

July 17, 2010 while discussing the iPhone 4 antenna problem – “It’s nowhere near a company-killer yet, but it’s beginning to look like a product-killer.”

Yep, that definitely killed the iPhone.

And the best for last:

Sept 28, 2010 -“The developer mindshare predictions lead me to another projection. In 2011 the iPad is going to get seriously hammered by the wave of Android tablets now just beginning to ship.”

Over 40 million iPads sold in 2011.

Seriously, why does ESR get any credence when it comes to any predictions concerning Apple?

esr, Apr 21st, 2011: “The question is no longer whether Android can be stopped, but when Apple’s market share will fall off a cliff. I think that could easily happen as soon as the next 90 days; one of the patterns in technology disruptions is that collapse often follows the victim’s best quarter ever.”

esr, Jan 24th, 2012: “I never said I could predict a time, and the last quarter before a disruptive collapse is pretty usually the sustainer’s best.”

It’s true – “as soon as the next 90 days” isn’t predicting a specific time, it’s suggesting a possible timeframe. And for Apple disruption is certainly going to happen after their best quarter ever, since nearly all quarters *are* Apple’s “best quarter ever”, and the disruption will doubtless be traced back to the previous “not best quarter”. So no surprises there…

esr, Aug 25th, 2011: “The near-term threat of an Apple market-share collapse to the 10% range or even lower is, in my judgment, quite significant – and comScore’s latest figures whisper that we may have reached a tipping point this month.”

Keep up, people: “near-term threat” does not specify a specific time. Also, “may” is a good way to avoid being held to “this month” as a specific time prediction.

esr, Jan 24th, 2012: “… despite the overall market slowdown Android’s lead in both share and volume is still increasing.”

comScore hasn’t posted December numbers yet, but November’s numbers show significant slowdown and Nielsen’s numbers suggest that Android’s leads might shrink, at least a bit. That’s a short term trend, though, because surely many manufacturers producing many models can find a way to out-sell a single manufacturer making a handful of models.

esr, Apr 21st, 2011: “The iPhone didn’t need just moderate success on Verizon… it needed to rack up sales numbers high enough to exceed Android’s growth over the same period to dent Android’s momentum. That didn’t happen…”

Until last quarter, where more than 50% of all phones sold were iPhones.

esr, Aug 7th, 2011: “the multicarrier ‘breakout’ only netted Apple about a 1% competitive gain, and that gain now appears to be over.”

Or not. Oh, wait – he said “appears”. Nevermind.

esr, Jan 24th, 2012: “Apple is making potloads of money, but it still isn’t competing against Android smartphones very effectively.”

Because competitive success can’t be measured by revenue or profits or silly metrics like that. It’s measured by unit sales. And eventually a large number of manufacturers pushing a large number of models will outsell a single manufacturer making a handful of models… except in the case of Verizon last quarter. And maybe the other carriers, we’ll see as numbers come out. But certainly more Android units will sell in the long term, and Apple will go back to not competing very effectively…

This couldn’t be more true – the 4S looks *exactly* like a previous 14 month old phone… the iPhone 4. It can’t get more lackluster and “me too” than being an exact copy of a previous model.

Unless “me too” is meant to suggest that Apple’s copying *Android* products, which increasingly have huge screens and LTE… which Apple isn’t doing. Are they copying the competition or failing to copy the competition? I’m so confused…

Summary: Apple’s failure is guaranteed, and measurable in Friedman Units. Any success metrics that anyone might produce are actually just signs that they’re even closer to an even more spectacular failure…

@pinhead Claimchowder is amusing fare. Android has been at 50% US market share since December according to NPD and November according to Gartner. Only Comscore with their 3 month average has it only nearing 50% so he can keep claiming his milestone has not yet passed for collapse. Given the iPhone market share on Verizon last qtr that may be a few more qtrs from now.

Eventually Apple will falter. All companies do. At which point he can claim he predicted this outcome.

But not this qtr. Or in 2012. Which means that esr is ultimately wrong as the mayan calendar indicates no market share for anyone in 2013.

> No, being able to put CM on your phone is more akin to being able to replace your car stereo.

No, being able to put CM on your phone is a lot like being able to change the firmware on your car stereo so it will play new formats, be able to retrofit a GPS, and have slick auto-tune functions based on your location and time-of-day.

I have CM7 on both my Motorola Atrix 4Gs (My wifes and mine) and CM9 on my Samsung Galaxy S it was not hard rooted all three myself from info off the net. I would also like to add that I used to be a Big Mac fan I still have 2 Clam Shells and a 4G iBook but never again. The one thing I get from folks around me who have an iPhone is they would rather stay with an iPhone because it’s easier than learning something new. Sounds like sheep to me.

That comment would seem to indicate that freedom is scratchy, unpleasant to touch?

Oh, when it’s Android it’s simply flexing your rights; it’s only when it’s Apple that it’s “chafing” from the oppression of a walled garden.

Funny, but completely misses the point. We’ve been hearing for years now how only misanthropic deviants use Android. Those are expected to go the extra mile and wrest full control of their systems from the carriers. Yet a much smaller percentage of Android users actually do that than Apple users do.

@Bryant:

— or that iOS users are more tech-savvy.

Perhaps a bit closer to the point, in that a lot more people can afford Android phones than Apple phones, and there is probably some slight positive correlation coefficient between income and technical ability. But I would wager that a lot more iOS users are comfortable mucking around with their phones, for the simple reason they will assume (mostly correctly) that they can go to the Apple store and get it fixed if they screw it up.

Louis4, one can only presume that even the “believers” have to duck their head, pretend they don’t even know who he is, and ignore with scorn how foolish some of the things he says… gems like: “Apple is making potloads of money, but it still isn’t competing against Android smartphones very effectively. Which is why 4S still looks like a lackluster “me too” product, despite the predictable “ZOMG record quarter” stuff.” and “I never said I could predict a time – and the last quarter before a disruptive collapse is pretty usually the sustainer’s best.” That first statement is just laughable. The second has a certain brilliance: I never said I was predicting Apple’s decline to a specific event or time even though I did, but I will just say that I can predict it may be next quarter because if this is their best quarter than maybe they are about to collapse, but I’m not predicting it, but I want you to believe I have evidence that it may happen next quarter even though there is no chance in hell it’ll be next quarter.

@patrick Or maybe not everyone is a zealot and many own both ios and android devices and jailbreaks or roots/roms as it tickles their fancy. I’ve never bothered to jailbreak my iphone but have jailbroken and modded my aTV. Likewise I’ve played around with CM on my touchpad. A million jailbreakers and a million CM users are noise in the larger iOS and android markets.

The fact that iOS is just as “free” as Android is what is really chafing you guys. iOS users have been able to jump over that garden wall since July 2007…about a week and a half after the initial launch. The fact that there are nearly a million iOS 5 A5 (meaning iPad 2 and iPhone 4S only) means that Apple doesn’t really care if their users jailbreak. For one thing, unlike Amazon and B&N their business model is based on selling hardware for profit. Not selling hardware for little to no profit and making it up on other sales. So if you buy an iPad 2 just so you can jailbreak…not much skin off Apple’s nose.

At least there’s good progress on the locked bootloader on the Nook Tablet.

I assume that you also assumed that Google provided an opt-out to protect your freedom and privacy (and they did). And I’d also assume that you would want to continue to protect that opt-out to protect your freedom and privacy as the right thing to do rather than glibly accepting you’ve lost that freedom and privacy and seemingly accepting it willingly.

> I assume that you also assumed that Google provided an opt-out to protect your freedom and privacy (and they did).

Sure. Still do. Just don’t use google services.

> And I’d also assume that you would want to continue to protect that opt-out to protect your freedom and privacy as the right thing to do rather than glibly accepting you’ve lost that freedom and privacy and seemingly accepting it willingly.

I’m actually fairly happy with google. AFAIK they don’t sell or share my information. They just use it to calculate what ads they would show me if I had my browser configured to show ads. If you have any other hard information on what they do with any knowledge of me, please feel free to spill it.

>“Seriously, why does ESR get any credence when it comes to any predictions concerning Apple?”

Well, one good reason is that I’ve been consistently right about Apple’s failure to keep Android from eating its lunch in smartphones – notably back in 2008-2009, before Android overtook the iPhone. I called the timing of that event within weeks – correctly.

Furthermore, I didn’t pull those predictions out of thin air. I wrote down a generative theory about the underlying technological and economic trends and explained how my predictions followed from those trends.

Even now, you can hyperventilate all you like, but the fact is that Android is still increasing its lead in both share and userbase. All the recent slowdown did is reduce the rate at which Android’s lead is increasing.

37.04 Million iPhones in 2011Q4 up from 20.34M in 2011Q3. That are a lot of phones.

At 700K activations a day, Android use increased by some 60 Million in 2011Q4. In Q3 there were around 50M activations.

So, indeed, Apple increased their phone sales from 40% of Android activations in Q3 up to 60% of Android activations in Q4. Quite an achievement. See how they will fare in 2012Q1 with no new model and no big festivities. Or it must be that the Chinese are all going to get an iPhone for the New Year.

@Eric’s predictions
I think that Eric’s predictions about Apples position in the market are hampered by his very strong believes in the efficiency of markets and it seems he can not even contemplate market failure without government interference.
However, the Smartphone market is clearly inefficient and fails in important aspects. That trips up Eric’s predictions in my view. (if the most expensive player with the highest margins can cream off a market without a technological advantage, that means a market is inefficient, cf, MS Windows)

@AppleWins
I can easily see that you all fear (and know) deep down that Eric is right from your shrill voices.

Yeah, guys, have some perspective. esr *did* successfully predict, as far back as 2008-2009, that many manufacturers selling many devices would eventually outsell one manufacturer making a handful of devices. That’s a pretty bold prediction, so stop all your shrill hyperventilating.

Unit sales (as represented by marketshare and userbase) are the only reasonable metrics for success. The fact that Android manufacturers are mostly losing money on Android handsets (see HTC and Motorola and… pretty much everybody except Samsung, who’s happily posting profits from selling off other parts of their business) matters not at all, because profits are irrelevant. When HTC and Motorola and Samsung stop making Android handsets because they go out of business or decide to cut their losses, some other company will step in and take their place, and the relentless march of Android will go on.

Even Kindle Fire and Baidu Yi just represent the continued success of Android the platform, regardless of their implications for Google. Nobody needs to profit – Android is open source, and will live forever, eventually taking over everything, everywhere. Just like Linux has…

>[Eric] can not even contemplate market failure without government interference.

Oh, no, I know way too much economic history to make that mistake. Market failures without government interference are much less common than those produced by government interference, but they do happen.

The myth is that government intervention will fix them; theoretically this is at least possible, but it almost always fails because the people profiting from the market failure buy or co-opt the regulators. In fact, the usual effect of government intervention in such situations is to actually freeze the failure in place so it becomes much more difficult to remedy by technological change.

The history of “last mile” oligopoly in the U.S. is a perfect illustration of this.

Tim Cook obviously puts on a brave face in public and spouts some happy story about posting larger *profits* last quarter than all of Google’s *revenue*, but we all know that privately he’s *totally* worried about how badly Android is eating Apple’s lunch in smartphones…

@esr
“Oh, no, I know way too much economic history to make that mistake.”

My error of inference.

@esr
“The myth is that government intervention will fix them; theoretically this is at least possible, but it almost always fails”

I have yet to see a market solution that beats “governments” in public goods like basic education, defense, courts of law, road building (small roads), etc. But that is literally, I have not seen any practical implementations.
(all to do with getting stuck in the low Nash equilibrium where concerted action would allow a high Nash equilibrium)

Yeah, I’d totally be worried in Cook’s shoes, too. I mean, in the doomsday scenario, if iPhone sales go to *zero* next quarter, then they’re looking at revenues only about 30% higher than Google’s last quarter and net income of 4x or 5x Google’s last quarter… and then what are they going to do? They’ve only got $97 *billion* in liquid assets (compared to $3.4 *million* in operating expenses last quarter) that they can use to figure out how to recover from dropping from “staggering” income down to only “pretty good” income.

So, yeah, I’d be stressing about the possibility that Android might completely crush my smartphone business, rather than, say, planning how I might push, oh, some other product lines and new innovation to diversify my revenue stream in anticipation of an eventual dropoff in my clearly doomed smartphone line…

@esr
“You get unstuck from suboptimal Nash equilibria when transaction costs drop enough so that the externalities keeping you stuck can be internalized as market transactions.”

The big questions then are whether transaction costs can get low enough and can all externalities be internalized? Another problem is that markets have limited size, limited numbers of players, and often an information lag.

However, I do not think any of these are at play in the Smartphone market (except for the carrier oligopoly). That market looks like a text-book example of Luxury goods, products chosen for status because they are too expensive. Such a market will not become efficient (minimal margin) until the product itself has lost its luxury status.

So, back in the days when your average grandma and k-6 school child got a cell phone, cell phones lost their luxury status. People went for the bottom price decent functionality, and we saw the rise of Nokia going for bulk mass. When average grandma’s and school children get their Smartphones, these too will lose their status. We can expect that new “Nokias” will rise with bottom price Smartphones. At current rates, grandma’s and school children will start obtaining Smartphones this year in the West.

Actually, we can expect the bulk of the feature phones to be replaced by Smartphones this year. That would mean a doubling or tripling of the Smartphone market. I am not seeing all these cheap feature phones replaced with the most expensive Smartphones (ie, the iPhone).

I prefer empirical studies. But as I am not an economist by any stretch, I leave that to others.

Though, I think the Smartphone market development will become a textbook case in technology diffusion, technological replacement, and new market development. There must be a wealth of data on market penetration and price comparisons, as well as on the effects of regulatory landscapes on market and price development in the different countries.

Can you perhaps name some generous and benevolent alternative to Apple who offers writers a better deal than 70% of the cover price, and also lets the author set that price?

I see that Amazon has just changed the deal they offer for publishing to Kindle to match Apple’s 70%, but those terms are only available if you choose a price between $2.99 and $9.99, and that price must be at least 20% less than the lowest price for a printed copy of that same book. I’m sure that Amazon intended to give authors 70% all along, and the fact that they waited to do so until Apple had led the way is a mere coincidence.

@Cathy
It isn’t that surprising to me. Maybe it is easy, but it doesn’t seem like it. I have an HTC Inspire “4G” from/with ATT. There are a few things I’d like. I’d like to have a command line or such, root access on occasion, to be able to truly delete a few useless (to me) aps that ATT in its finite wisdom won’t let be deleted (and pesters me about upgrading. I have no desire to _use_ Facebook, why should I ‘upgrade’ the damn thing?). I love the idea of a well maintained but not so constrained market, the ability to to a one-click upgrade, etc.

But… having looked at what rooting, etc. involves managed to scare me off. For what it’s worth, I run Linux on every computer I have except the Apple ][ stuff and one old seldom used box that has OS/2. And I’ve used a range of distributions. And still it feels like “OMG, how much risk am I gonna be taking and how much might I lose if I do this?” I note that even ESR didn’t put CM on his primary device, but on an “obsolete” thing that if it broke it would be annoying, but not a critical loss. So far the idea of problems has yet to be truly overshadowed by even real annoyances.

If I knew, for sure, that I wouldn’t brick the device and could get to the current state as the worst case, I’d be much more tempted. I’d also want everything that works now, to keep working. I forget which item it was was, but there was something with the Inspire 4G that was “You’ll lose this, but this $HAIRY_LOOKING_PROCEDURE might take care of that.”

Inexpensive tablets with screen sizes up to 10 inches and Google’s new Android 4.0 OS will soon become available at prices ranging from US$100 to $250. The prices are a breakthrough for users looking to get Android 4.0, code-named Ice Cream Sandwich, on tablets, which have so far been equipped with Android 2.x or Android 3.x. Some of the sub-$250 tablets run on smartphone processors and may lack the processing power of Apple’s iPad 2 or Asus’ Eee Pad Transformer Prime. But with cameras, high-definition video capabilities and HDMI ports, these devices could provide good value to budget buyers.

Another marketshare prediction to be taken with a large grain of salt. Eric is not the only one who sees a serious problem coming for iPhone marketshare. But anyone betting on Windows Phone marketshare rising to significance is in for anxious times.

IHS predicts that Windows Phone will reach 16.7 percent of market share in 2015, behind first-ranked Android at 58.1 percent and just slightly ahead of iOS at 16.6 percent. The analyst said the introduction of the Lumia 900 running Windows Phone 7.5 (Mango) at CES showed Microsoft’s and Nokia’s promise in smartphones.

Basically, the November 16th declaration was based on the “official” numbers of this summer (July). Daily Android activations have risen by 30k a month for over 18 months now. So, no, the 700K/day activations was not a spike of a few days, it was the normal, stable and continuous increase of activations.

“… the usage of Microsoft Corp.’s Windows Mobile operating system in smart phones will nearly triple from 2009 to 2013, allowing it to reclaim the No.-2 position in the global market, according to iSuppli Corp.”

“In 2013, 67.9 million smart phones will use the Windows Mobile operating system, up from 27.7 million in 2009. This will give Windows Mobile a 15.3 percent share of the global market in 2013, second only to the Symbian operating system, which will control 47.6 percent.”

I mean, they might have been *slightly* off, since comScore in November put Microsoft at 5.2% share of 91.4 million pool (roughly 4.74 million units)…

“We’ve been hearing for years now how only misanthropic deviants use Android.”

No, mostly people have been saying cheap, non-discerning customers use Android. A small minority of Android users are the misanthropic deviants who actually care about custom ROMs so they can, as someone so elegantly stated above, escape the jails they tell us do not exist.

“Yet a much smaller percentage of Android users actually do that than Apple users do.”

Based on ONE count of ONE custom ROM which, while certainly the most popular, is one among scores of options? That’s poor data for a poor argument.

@Larry Yelnick: Also, you might have found a slowdown in activation growth rate, but that doesn’t necessarily correspond to a slowdown in the growth rate of Android’s *marketshare*. Which, remember, is the One True Metric. I mean, just look at @esr’s own data and you’ll see that the march of Android’s growth is unabated, if not accelerating:

Can you make a case for a slowing of Android’s growth overall based on that data?

Pay particular attention to the “Projected Android market share” graph, where *clearly* the growth is on a straight line. The three September / November data points are just outliers, I’m sure the December comScore data will plot a point right *on* that projected line, and Android will continue growing at the same steady pace until there are no competitors left…

Apple has nearly $100 bilion in cash. If they earned 8% on that money, they could buy $RIMM on *this year’s* interest alone. Or, they could park that $100 billion in cash (let’s ignore that it’s growing by about 1 billion a week) and if they earned a mere 6% annual return, they could pay for all Apple marketing and all Apple R&D, on that interest every year…until the end of time.

They would have to re-patriate it, of course, and that’s a problem.

But suggesting that Apple is about to crash, when it could survive forever on its cash-on-hand shows that either you don’t know what you’re talking about, or are too willing to ignore reality.

@Larry Yelnick: @esr yawned at you on the 23rd and he’s yawning at you now. And after the comScore numbers come out, he’ll yawn at you some more, even if, against all odds, the comScore numbers show less growth for Android and more growth for Apple. Because that’ll just be another small outlier or blip. That straight-line projection doesn’t lie, man, regardless of the actual data that might come out.

Also, you can’t count on something like actual financial statements – those are pretty much straight-up lies from companies just to prop up their stock prices. They can’t possibly reflect any objective reality. That’s why *good* companies like Samsung stopped breaking out unit sales. They just wanted to stop having to keep reporting lower-than-actual numbers to avoid showing off how badly they’re killing Apple.

And you can’t accuse @esr of panicking, either. He’s confident in his position it’s unlikely his confidence can be shaken. Objective reality agrees with him, after all.

As for Apple repatriating their cash, that’s going to cause a huge hit. If only they had *overseas* operations, like manufacturing, for example, where they could maybe spend that money without repatriating it. Or repatriating it at much more favorable rates…

@Larry Yelnick: Also, the Verizon number is clearly a one-time bump due to pent-up demand of all those users who wanted the iPhone originally before it was released on Verizon. It just took ten months for all those users to decide that they wanted to upgrade. But now that all those iPhone-wanting users have bought their iPhones, Verizon will go back to selling mostly Android phones again, you’ll see. It’s not like Verizon’s iPhone sales have *outgrown* Verizon’s Android sales over the course of the year or anything…

@Larry Yelnick: Also, that massive growth in Apple’s cash is another clear sign that failure is imminent. I mean, at some point everyone will run out of money and what will happen to Apple’s cash reserve then? The more they accumulate, the less there is for everyone else, and the sooner they’re going down…

Now, that is a very, very inefficient use of money. And a sure sign of market failure.

@Larry Yelnick
“By your own data, daily Android activations only rose from 550k/day to 600k/day during the period between July 1 and Oct 1.”

The problem with your calculations is that neither you nor I have a clue about when these numbers are measure wrt when they are reported.

I arbitrarily put them on the first of each month. Note the nice round numbers (500k, 550k, 600k, 700k). If you do month by month calculations you are bitten by BOTH the rounding errors on the activation rates AND the rounding errors on the measurement periods. However, if you aggregate the numbers over larger periods, 6/12/18 months, you get straight 30k/month increases in daily activations. And you find that for every period. For example, the 7 months June-December 2011 show and increase from 500k to 700k/day. That is an ~30k/month increase down to a rounding error.

We’ll just see how all this breathless hype nets out in actual userbase and market share numbers, shall we?

And maybe one day we’ll see how all this breathless hype about android’s market share nets out in actual profit made for Google. Maybe.

I don’t know how you can claim with a straight face that Android is “eating Apple’s lunch”. Apple made more money than anybody else! How is their lunch being eaten again? Their *profit* for last quarter exceeded Google’s entire *revenue*.

If your Mail and Safari apps are frequently crashing then there is something wrong, because that is not typical behaviour for OS. I can’t remember the last time I saw either of those specific apps crash, and I interact with a high number of different iPhones on a regular basis (as an iOS developer).

Third party apps are usually the ones that do the crashing, and even there I see maybe 1 or 2 crashes a month on my phone. Of course, your results will vary depending on what apps you have installed.

No, they just removed opt-out of service-targeting if you have membership in any one of their services. Presumably you knew this which is why you said the option was to not use Google. Now you are lying by saying you can turn it off.

To William O. B’Livion, with Cyanogenmod on my Samsung Galaxy S (AT&T Captivate model), it was absolutely the best phone I’ve ever owned. I liked it so much, that I recently went out and bought a Galaxy S II.

Both my phones are running CM 7.1, and I’m running CM9 alpha on my HP TouchPad. I won’t ever run an OEM stock ROM on my Android devices for any longer than it takes to root it and install Cyanogenmod. It’s just that good.

As for the cash reserve, Apple spent more than $11 billion last quarter on acquiring assets like manufacturing capacity and storefronts. Think maybe that hints at what they’re keeping that reserve for?

The disruptive collapse of Apple is imminent, just as @esr says. Ask anyone!

Except the man who literally wrote the book on disruption, Clayton Christensen. He seems to think that Apple’s not only on the verge of being disrupted, but that they may actually be *immune* from disruption, because they have a history of being willing to disrupt themselves.

Or Bob Moesta, a long-time collaborator with Christensen, who sees Apple as a model of successful application of “Jobs To Be Done” theory, which he authored with Christensen. He doesn’t seem to see any threat of disruption, either.

Or Horace Dediu, a student of Christensen, who sees Apple as the model of success and does quantitative analysis to understand why Apple’s succeeding in the market. He also writes a fair amount about disruption and he doesn’t see a significant threat to Apple, either.

But those guys are clearly Apple fanboys who just can’t see the objective reality that Apple’s on the verge of doom. After all, Apple just had their most successful quarter ever, which is usually the quarter followed by disruptive collapse…

I thought the sandbox prevented applications from interfereing with each other. I’ll try setting UIApplicationExitsOnSuspend to YES.

Sorry, I wasn’t very clear. I didn’t mean to imply that other apps were interfering with Safari or Mail. You’re right that that should not be possible.

All I meant was that 3rd party apps tend to crash more frequently than Apple’s apps. Safari and Mail are pretty rock solid in my experience.

If you are experiencing frequent crashes with those applications then there must be something amiss. Perhaps corrupted preferences or permissions. Perhaps your mailbox needs rebuilding. I don’t know. If the behaviour continues I would take it into an Apple store and have them take a look at it, or restore the phone yourself.

No, they just removed opt-out of service-targeting if you have membership in any one of their services. Presumably you knew this which is why you said the option was to not use Google. Now you are lying by saying you can turn it off.

Your misunderstanding is not my lie, asshole. I never see ads from google because of how I have my browser set.

As I understand it, an app using a great deal of memory can restrict the memory available to other applications if it is not well behaved. I need to check for leaks again.

I’ve put it aside while I bone up on Core Data. Do you know offhand where I could find explanations that compare and contrast with MFC? I know, it’s almost blasphemous, but the associations with things I already know would help. The Apple ecosystem seems rather insular. Maybe its just me. The tutorials sadly don’t use tell-me-three-times, which would also help.

My problem with Google is not that I see ads from them (like Patrick I use AdBlock, javascript whitelisting etc) or that I think they are selling my data. My problem with them is two-fold:

1. They are collecting a huge amount of information about you even if you are just logged into your account, doing searches and browsing the web (see double-click). You can usually find technical measures to get around most of it, but it’s a pain and those measures often break things. Although Google isn’t selling this information it is sitting on their servers. This means two things. First of all those servers can potentially be the subject of security breaches. Second of all, that data is subject to seizure by national governments. I am not super comfortable with either of those things.

2. Because their business model is geared towards selling me to advertisers, rather than selling their services to me, their interests are less directly aligned with my own than is the case with a company like Apple, whose only source of revenue is selling stuff to me. I am their customer and I pay them money. I am not google’s customer. I am Google’s user, and the product they sell to their real customers (advertisers).

“Demand for the iPhone 4S helped Apple’s U.S. share of the smartphone market climb to 44.9 percent in the last quarter of 2011, Kantar said, doubling from the same period a year ago and gaining a very slight edge over Google’s platform. Android slipped to 44.8 percent from 50 percent during the quarter.

Apple’s success isn’t isolated to the U.S., either. Dominic Sunnebo, Kantar’s global consumer insight director told Reuters, ”overall, Apple sales are now growing faster than Android across the nine countries we cover,” which include the U.S., U.K., Australia, Brazil and Mexico, among others.”

Just an outlier, or static noise, or mistaken methodology in sampling, I’m sure.

If and when Apple has sold the 1.5 Billion iPhones needed to replace current feature phones, it will be clear that all other manufacturers can close shop and we have another USA monopoly on personal computing.

But, seeing is believing. Curious to see the 2012Q1 market results (or the real 2011Q4 line up).

@Pinhead: Exactly right. It’s just Christmas. Or Sprint. Or some other temporary factor. Android will return to winning next quarter, when Apple’s precipitous collapse begins…

@Winter: Also right – either Apple gains 100% market share and a monopoly, or they will fail and fade into obscurity. There’s no middle ground at all, no room for two players in the market. The success of one must lead to the total failure of the other, and we know that Android wins that battle…

I’ve put it aside while I bone up on Core Data. Do you know offhand where I could find explanations that compare and contrast with MFC?

Sorry, but until I just googled it I didn’t even know what MFC was, so I am not going to be of much use to you there. :)

I have only really brushed the surface with Core Data, and I must say it is not the easiest thing to work with. I’m afraid I don’t know of any up to date tutorials I could point you to. One of the constant headaches with iOS programming is that everything is constantly changing. Apple releases SDKs every few months that make all the tutorials and books out of date.

While Apple’s documentation is very accurate and comprehensive it is not particularly human or intuitive.

This is my advice to people who might be thinking of going into iOS development. If you enjoy the overall process of making end-user applications, and you are the sort of person who enjoys thinking about programs from the point of view of user interaction, then iOS programming is for you. You need to be oriented towards *making great products*.

However, if you are the sort of person who enjoys *programming* then I would say it might not be for you. I find developing for iOS less about programming and more about piecing together lots of pre-prepared pieces to make something new. Some people like that.

For me, I have to be honest and say iOS development is not the most fun thing I have done. I like being able to understand everything I am doing from first principles. I like writing C code with just the standard library. I even enjoy poking around with assembler. With Cocoa you don’t really ever completely understand everything that is going on with your program. You are basically working within Apple’s carved-out world of libraries and frameworks. Those frameworks are incredibly powerful, and you can make great things happen very quickly, but they don’t scratch my programming itch much.

Anyway, that is completely irrelevant to your question and I apologise for the digression.

Digressions are OK. We’re in one, after all, though it started with a request to compare and contrast iOS and Android program crashes. With all these Android fans somebody might know.

Shoot. My first full day messing with XCode I crashed it three times, which is more than I usually crash Visual Studio.

I like to put pieces together in new ways. Sometimes I write the pieces myself. If I can just get my head around Core Data I have this funny feeling I will like it the way I like STL. I’m not an advanced STL programmer, but if your objects are copyable and assignable and you can write a functor it’s fantastic.

@Cathy “Sometimes the option is more important than the total number of people who participate.”

Fine. But ESR’s conclusion of an announcement of an intent to build an appstore that has existed in the iOS world for nearly 3 years (Cydia launched a paid store March 2009, actually has roots older than the Apple App Store) and adoption #s of a custom ROM smaller than the equivalent jailbreaking on iOS as:

“Set this against Apple’s mind-bogglingly greedy and evil new Eula for iBooks, and it couldn’t be clearer what the ultimate stakes in the smartphone wars are…

Even in the short term, CynogenMOD’s numbers, and the plan for the Underground Market, and the wideapread revulsion against the iBooks EULA are a big deal – they’re going to crank up the pressure on cell carriers and various other malefactors in interesting ways. But maybe the most important thing CyanogenMOD’s numbers tell us is that there is, in fact, a mass market for freedom…

…a million installs recruited without marketing and in the face of the effort required to install CM means we can expect strong endogenous growth in the future…

…But it’s always nice when reality confirms that the downshouters and control freaks and MAAFIAAsi and glassy-eyed evangelists for the Cult Of Steve Jobs Or Someone Like Him are wrong. Hugely, desperately, finally wrong. There really is a market for liberty out there; it’s vast and it’s growing. This genie is not going to be stuffed back in the bottle.”

Which tells me that Apple is just as free as Android, has the same advantages as Android, is posed for the same endogenous growth as Android, and somehow the reality of the Cydia/jailbreak community dating back to 2008 is proof that Apple will prevail in the long term. Or something. Not quite saying the same thing as an idealogical principle is important even if the vast majority don’t care about it.

>though it started with a request to compare and contrast iOS and Android program crashes

The best I can give you is my own experiences. Allow me to preface upfront my biases and possible confounding factors: I am a fan of Apple and their products, and worked for them for a time. I had an 1st gen iPhone that I was given by Apple, but only used it jailbroken and unlocked on Suncom / T-Mobile as I couldn’t afford AT&T service. I currently use an LG Optimus V on Virgin Mobile and run the stock android install (2.2) but I don’t use the stock browser or email applications. In my experience, the LG Optimus has more application crashes, hangs and other failures. When I was using the iPhone I might have an application crash once or twice a month. My LG has been getting progressively worse and I probably see a crash once or twice a week now between the browser (dolphin), email (K-9) or even the phone itself will occasionally lock up when unlocking or trying to answer a call. Those latter lock ups are usually cleared up by waiting until the phone auto locks and trying again.

Right, near monopolies is exactly what we saw in the cell industry before the introduction of the iPhone, where “near monopoly” means “Nokia peaked just under 40% marketshare”. But *this* time it’s different, Android is definitely going to head to a monopoly, we simply won’t see the situation we saw before, where multiple vendors shared substantial chunks of the market.

I’m a little confused, though – is Apple’s $100 billion a “very, very inefficient use of money” or is it a “war chest” that they’ll use to prevent them from being destroyed? Or maybe saving up a war chest, “just in case”, is a very, very inefficient use of money. Like a savings account…

It’s also instructive to note that Apple was on the wrong side of the “near monopoly” in the computer industry and somehow managed not only to survive, but grow *that* *segment* of their business, remaining profitable in *that* *segment* while being the clear loser in market share.

That’s all irrelevant, though, as profits matter not a smidge, market share is the only true metric. Because once market share declines, it never bounces back, and the company is doomed to failure, cf Apple.

Shoot. My first full day messing with XCode I crashed it three times, which is more than I usually crash Visual Studio.

Ha. Yeah, the new Xcode 4 is still pretty buggy. Newness is the enemy of stability, and Apple is always pushing out new stuff.

That was Xcode 3. Makes me wonder if it gets better.

Apple changed the UI so much for Xcode 4 that I’m still trying to find my way around. One catchphrase around our house is “It’s intuitive!”, said whenever we can’t figure out how to do something and there’s no documentation. We started saying it when we got our first iPod.

though it started with a request to compare and contrast iOS and Android program crashes

The best I can give you is my own experiences. Allow me to preface upfront my biases and possible confounding factors: I am a fan of Apple and their products, and worked for them for a time. I had an 1st gen iPhone that I was given by Apple, but only used it jailbroken and unlocked on Suncom / T-Mobile as I couldn’t afford AT&T service. I currently use an LG Optimus V on Virgin Mobile and run the stock android install (2.2) but I don’t use the stock browser or email applications. In my experience, the LG Optimus has more application crashes, hangs and other failures. When I was using the iPhone I might have an application crash once or twice a month. My LG has been getting progressively worse and I probably see a crash once or twice a week now between the browser (dolphin), email (K-9) or even the phone itself will occasionally lock up when unlocking or trying to answer a call. Those latter lock ups are usually cleared up by waiting until the phone auto locks and trying again.

But only the computer industry. By comparison, home video game systems and prior cell phones have all been multi horse races.

Video game systems are a bit more complicated than that. In the Atari days, well, there was Atari, and a bunch of other minor systems that mostly got by by selling a hardware-based compatibility add-on to play Atari 2600 games on them.

Then of course, there was the NES days, which followed a market crash a couple years prior to its release. Nintendo basically ruled the markets wherever they officially operated in — and clones such as Dendy provided a means for markets ignored by Nintendo (eg, the Soviet Union is where the Dendy was made). Sega started to make their appearance in this era with the Master System, but were only successful in markest Nintendo was not in; not for lack of trying, they tried to sell the Master System in the US, Europe, and Japan just as well, but Nintendo was employing business practices not unlike Microsoft (especially 1990s Microsoft)… paying off retail stores to not ship competitors’ consoles/games and so on.

Sega was finally able to make headway by releasing the Genesis/Mega Drive nearly two years before Nintendo’s equivalent was out the door. “Genesis does what Nintendon’t” is still firmly in my memory :P They used its technical prowess to woo NES players over to their side, and eventually went full-on competitive against Nintendo by making their own flagship franchise (Sonic the Hedgehog). By almost sheer luck, when the SuperNES was released, the console RPG phase came in to being and nearly all of them were SuperNES exclusives; Nintendo didn’t do too bad in the end, enjoyed wild success even though I imagine they were bitter Sega forced them to have only half of the market.

It was after this point that both Sega and Nintendo started to tank; Sony released the PlayStation a year before the Saturn and two years before the Nintendo 64. Boasting not just technical prowess, but all those console RPG developers flocked en masse to the new system, featuring full CD-ROMs to have nearly all the content they could dream of, and it didn’t take long before the games started spanning multiple CDs as well. The Saturn also used CDs but largely lacked the RPG games and thus that playerbase. The Nintendo 64 still used cartridges with ROMs only up to around 128MiB for the most expensive ones, in a time that both of the other consoles were using 700MiB CD-ROMs. This generation and the one following it is where Sony basically ruled as the one market leader — having a PlayStation 1 or 2 meant you had access to pretty much all of the games, especially the good ones. In the PS2 era, Nintendo just saw further decline in their market with the GameCube (1.5GiB discs compared to PS2’s 4.3GiB DVDs, once again the storage medium won), Sega exited the stage, and Microsoft’s brand-new entry only saw mild success thanks to Halo being rather popular and an Xbox-exclusive.

The current generation is where console RPGs have largely faded out of popularity and public view; Microsoft making an early head-start in the generation with the Xbox 360 helped them see bigger success than their first console, with more developers targetting it. The PlayStation 3’s high launch price and launch issues pretty much pushed back Sony from being the market leader to tail light chasers. Nintendo sees themselves as having made a big come-back because of the insane sales the wii generated; the only problem is that the console is weak (it’s about on par with a PS2) so developers don’t want to put the effort to shoe-horn their Xbox360/PS3 games onto it, the big publishers all avoid it, the consoles go unplayed, and the best-sellers consist of first-party Nintendo titles that have been slipping in quality; I don’t expect the Wii U, their followup, to make nearly as big of a splash.

tl;dr: the video game industry has not always been a “multi-horse race”, and even in the times it seems it is, there are at most three players in the field. the first generation was ruled by Atari, the second by Nintendo, the third shared between Nintendo and Sega, the fourth and fifth generations ruled by Sony, and the sixth generation largely led by Microsoft and Sony with Nintendo seeing false-success.

Well of course you knew about it in advance. You taught them their strategy. We had to rely on tea leaves like their stock going down on disappointing earnings and them having to provide a better value to their customers to keep their rates up.

@wlad: Are you suggesting we should be looking at multiple data sets and consider this a very complex system with hard-to-quantify interactions? Because that’s not what we do here. We do “one simple view” with just the data that supports that position. Any other data is clearly biased or not relevant…

@wlad: I’m just pleased that we can easily predict the ultimate outcome using a single metric (market share) and a single set of data (comScore). As you can tell from my posts above, I hate having to look up other data or read up on alternative explanations…

@nato
> I’m just pleased that we can easily predict the ultimate outcome using a single metric (market share) and a
> single set of data (comScore).

If you’re going to snark, be accurate. The prediction is based on previously-laid out principles, not the data. The data have been matching the predictions, not the other way around. Apple’s financial success has fuck-all to do with the main predictions as laid out (eg that Android will grow market share at a certain pace, etc). Using those predictions, and the trend of data matching said predictions, esr has posited some other potential results, namely the collapse of Apple to single-digit market share. Thus far that first hypothesis of Android’s rise has not been falsified; the second hasn’t shown correlation yet. There are still many more tests to come…

Couple years ago Eric predicted the Democratic Party was in decline. Today, the Democrats are stronger than they have been since Kennedy, and the Republicans are quickly realizing the difficulty of appeasing both their base and sensible people as they struggle to field the least offensive idiot they can for the White House race (which is still Obama’s to lose).

When Eric starts making predictions about the impending doom of X, it seems a pretty safe bet that X is in good health.

What principles justify claiming US market share is enough to make a call?

What principles justify claiming that 50% US market share is representative of a “zero sum game” in complete and utter defiance of all rational definitions of zero sum game?

What principles empower ESR to use Clay Christiansen’s disruptive technology theories against Apple when Clay himself has said he has been proven wrong over and over by Apple and that his own theories don’t seem to apply to them?

It’s cheap of me to resort to snark, I’ll admit. I generally do that when I despair that reasonable discourse can be effective.

However, perhaps I’m giving up on reasonable discourse too soon. So, I’d like to make sure I’m addressing the specific “previously-laid out principles” that underlie “the prediction”. Are you referring to the argument that @esr lays out in this post:

jsk, I have read every Smartphone Wars post. I see no underlying principles justifying these assumptions. Since you appear to have appointed yourself the advocate for this unjustified nonsense and claimed that they are well founded, I’ll leave it to you to make that argument. If you are not able to, I will consider your argument in support of the thesis and your attempts to foist the work on me as just as unjustified as the thesis.

I am still not convinced that Android network effects are as strong as iOS network effects. Studies seem to show that many Android users are buying their first smartphone, getting the cheapest one available, and not spending much money on apps. There are also indications that many iPhone buyers are former Android users. Combine all that will iPhone users having a higher satisfaction rate than Android users, and it’s hard to see how a majority Android marketshare is some some of permanent victory that will cause Apple to collapse. Android may be growing faster, but with less user satisfaction, phones that often can’t be upgraded, small profits for the manufacturers, and an increasingly fragmented OS, its success seems far more fragile than Apple’s.

The data have been matching the predictions, not the other way around. Apple’s financial success has fuck-all to do with the main predictions as laid out (eg that Android will grow market share at a certain pace, etc).

Apple’s financial success has everything to do with Eric’s predictions because he predicted they would suffer considerable losses as Android’s market share grew. That’s what “I’d sell Apple’s stock if I had any” means. He expected their financial difficulty to be imminent. Even as Apple made shitloads of money YoY, and just now had a record-busting 1Q of ’12.

Kinda like he predicted Obama would lose in 2008, and how he predicted the imminent death of Microsoft at various points in his advocacy career. (I remember at least two such: one in the late ’90s and one in the early ’00s.)

The first premise was that, due to Android’s open-source nature and extremely low barrier-to-entry, manufacturers would be able to produce Android-powered phones to compete in the smartphone market against dominant player Apple, and would thus be able to compete on price (initially) and features (as Android matured). Carriers would be able to offer those phones with a larger profit margin, and would be incentivized to carry more of them from both ends of the chain. Accordingly, Android share would rise at a certain rate and quickly overtake Apple’s own rate of market share gain.

So far, the data has shown that this was pretty damn accurate.

The second premise is that, due to the results of the first premise, Android share will eventually reach a critical point where network effects cause a collapse in any competing smartphone’s market share, effectively relegating the biggest of those (Apple) to a single- or low double-digit percentage.

As I said, we haven’t seen a correlation here yet. There are still a lot of data to collect as time goes on, and we’ll see what bears fruit.

That’s the crystal view. As things usually go, in reality it is far, far messier.

ESR made some soft guesses on when the market share collapse will happen, but there have been some unexpected effectors that have skewed things in the short term: the iPad disruption (one could argue for or against this having an effect on phones), the Microsoft zombie getting its claws into the manufacturer, and the carriers’ poor handling of Android itself via awful skinning, bloatware, and slow updates. Those are whole separate topics in themselves, though they usually gets sucked into the discussion anyway and muddy the waters.

For my part, regarding the second premise, I HOPE to see Android play an ongoing defensive action that puts Apple into the low 20s of market share – enough to keep making awesome profits and keep innovating in surprising ways. That’s a net win. I like Android a lot, but I dislike a lot about it to. However, I dislike less about it than I do iOS. If Android can just keep the spirit going so that in 5 to 10 years I’m not stuck with a choice between iOS or shit, I’ll be happy.

“The first premise was that, due to Android’s open-source nature and extremely low barrier-to-entry, manufacturers would be able to produce Android-powered phones to compete in the smartphone market against dominant player Apple”

Flawed premise: Apple wasn’t the dominant player in the smartphone market.

“Carriers would be able to offer those phones with a larger profit margin, and would be incentivized to carry more of them from both ends of the chain.”

Data indicates the contrary: carriers are incentivized to sign with Apple at lower device margin (but higher ASP to consumers) for long term ARPU. Android phones are receiving about the same treatment as dumphones at carriers.

“Android share will eventually reach a critical point where network effects cause a collapse in any competing smartphone’s market share, effectively relegating the biggest of those (Apple) to a single- or low double-digit percentage.”

The person credited with this theory is on record saying that it does not apply to mobile.

Well, first you said the solution was to stop using Google. Second, you said the solution was to opt-out. After I told you that the controvery was the removal of the opt-out. So which was the truthful statement: the admission that there is no opt-out and that the only solution is to stop using Google services, or the second statement where you claim I can opt-out of the opt-out removal?

“So in your world, you calling me a liar is not an insult, but me calling you on it is? Wanker.”

You’ve called me an asshole and a wanker for observing that in at least one or more statements you are not telling the truth.

I’m going to take your interpretation of @esr’s argument at face value, though I’d generally rather address his specific posts. I agree that he’s right that Android has risen quickly, but it’s not clear to me that he’s right about the *reasons* for that rise, and therefore it’s not clear to me that Android will continue to grow in the way he expects.

Addressing just your points specifically, it’s not clear that carriers have been able to offer Android phones at larger profit margins – in fact the opposite seems to be true, especially at the high end. But for carriers the profit tends to be in the services bundled with the plan, not the sale of the phone hardware, so I’m not sure that’s a big driver of Android adoption.

It’s also not clear that the handset makers (in case you meant to say handset makers and not carriers) have been able to offer Android phones at larger profit margins. Apple’s profit margins are *staggering*, and HTC and Motorola recently posted very very poor quarterly numbers. Samsung posted pretty good numbers, but a big chunk of their revenue came from the sale of their hard drive business to Seagate, so it’s not clear that Android phones are a big source of profit for them.

So I agree that the data has supported his growth rate claim, but it’s not clear to me that the data supports his underlying theory regarding the cause of that growth. And, indeed, unless analysis is done on metrics like profitability, one *can’t* support the theory that larger profits drive Android adoption.

That’s part of why it’s so frustrating to me that the only data discussed here is comScore’s market share data.

The other reason it’s frustrating is that the “soft guesses” that you attribute to ESR are often based directly on the most recent set of comScore data, not on data that speaks to the underlying factors that may be contributing to that comScore data.

Moreover, as PapayaSF eloquently points out, there doesn’t seem to be a lot of data to support a strong network effect for Android, so it’s not clear that the second premise is true, either, and discussing the comScore data each time it comes out doesn’t get any of us any closer to understanding what’s really going on.

Which brings me back to my snarky comment: repeated analysis of the comScore data doesn’t lead to an understanding of the marketplace, it simply allows for one to say “See? This set of numbers supports what I’ve been saying all along…”

Here it seems very much that @esr has already chosen what he thinks will happen, then found some business theory (disruption) and some data (comScore) that supports his conclusion, rather than working from the data *to* a conclusion.

Could be negligence, not selective reading… except that a previous poster posted those figures above, so now they’re clearly in @esr’s view.

And that’s just one example, there are plenty to pull out. Read the Smartphone Wars posts in a 4 or 5 blog post interval (i.e. 1, then 7, then 2, then 8, then 3, etc) and you’ll start to see some early confident claims that end up being unsupportable, but aren’t ever referenced again.

And that’s why I resort to snark – because reason doesn’t seem to apply…

And yet the results (market share gain) still match the prediction. I’m not putting forth arguments here, I’m summarizing the original premises.

> The person credited with this theory is on record saying that it does not apply to mobile.

Great! That doesn’t change what the prediction was, and what he says means exactly as much as what esr has said. That is, not a lot, and there is still a ways to go before we can start really seeing anything resembling an end-game.

ESR made some soft guesses on when the market share collapse will happen, but there have been some unexpected effectors that have skewed things in the short term: the iPad disruption (one could argue for or against this having an effect on phones), the Microsoft zombie getting its claws into the manufacturer, and the carriers’ poor handling of Android itself via awful skinning, bloatware, and slow updates. Those are whole separate topics in themselves, though they usually gets sucked into the discussion anyway and muddy the waters.

I think (which I have alluded to in prior posts) that another effector that we are seeing that I didn’t expect (but that, in retrospect, is not that surprising) is the extent to which the carriers are clinging to the old model. The illusion that the phone is free and you are paying the correct price for network access is so important to maintain that the carriers are apparently subsidizing iPhones to the tune of $350-$400, but only subsidizing Android phones to the tune of $150 or so.

This has two effects that both tilt the domestic market away from Android and towards Apple. The first obvious effect is that Apple phones appear cheaper to the consumer because of the subsidy. The second effect is that the artificial propping up of the data access rates by this method means that a lot fewer people are actually buying smartphones than would otherwise. IIRC, 40-45% of domestic market has smartphones, and smartphones are 60-65% of handsets sold. These numbers may actually be in equilibrium, if smartphone owners buy new phones more often than dumbphone owners.

One final effector, that also tilts the market towards Apple by reducing low-end smartphone demand, is the unwillingness of the carriers to tolerate connected smartphones that are not using a dataplan, e.g. phones that use the network for voice, but do data via wi-fi only.

I thought you were indicating the rational, analytical principles underlying the predictions. Not pointing out that the principles don’t match the results, desired or not.

“That doesn’t change what the prediction was, and what he says means exactly as much as what esr has said. That is, not a lot, and there is still a ways to go before we can start really seeing anything resembling an end-game.”

It does undermine the notion that there are sound principles underlying the argument put forth by Eric though.

Hell, I certainly didn’t expect you to conclude that Eric’s predictions don’t count for much.

Patrick, how about you try again: the change in privacy policy has little to do with whether or not a shut off the display of ads. It is affecting the personalization of SERPs across all Google services and properties. So, in context, your statement makes no sense, is irrelevant, and misinformed. Usually, that is not the case with you so I guess I’ll apologize for calling you a liar now that I realize you don’t even know about what I was talking about.

Another poster has already noted that recent psephological data confirm this prediction. Look at the politics around Keystone XL, in particular, to see how the trends I indicated are playing out. Obama has sided with environmentalist gentry liberals against the Rust Belt industrial unions desperate for job creation; this exemplifies the Democrats’ retreat from the private sector, blue-collar voters, and inland America. Increasingly the party is regionalizing and particularizing itself to the coastal metroplexes, the public-employee unions, and the bureaucratic/media/academic New Class.

“The trap for the sustaining company/product is that as it chases high-end customers, it will ship marques that are more and more gold-plated – overdesigned, overengineered, and overpriced relative to what most customers actually want.”

This is the trap that @esr expects Apple to fall in to. Fast-forward to the iPhone 4S release. What’s the big knock against the 4S? That it’s the same design and almost the same product as the iPhone 4. It’s not overdesigned, overengineered, or overpriced – it hits exactly the same price point as the iPhone 4, and it’s below the price point of many of the high-end Android phones (like the Galaxy Nexus).

So what’s the selling point for the 4S? Primarily services – iCloud, Siri. Apple chooses to change the nature of the game, in a way that allows them to enhance their own network effects, rather than over-innovate and risk falling into the trap described by @esr.

Will it work? We’ll see. But it seems to fall pretty clearly into the argument advanced by Christensen here:

So it’s interesting to see @esr cherry-pick the part of Christensen’s work that he’d like to apply to the situation at hand, but ignore both the bigger picture of Christensen’s disruption case (i.e. that Apple’s not going down that road) and Christensen’s followup (i.e. that Apple behaves differently).

You’ve pointed this out as well, of course, but I think it’s worth tying it directly to @esr’s own writing…

nato, I’m fully aware of Clay’s and ESR’s arguments. I see no reason why I should try to construct some logical bridge between the two, particularly when I disagree with Eric (almost entirely) and appreciate Christensen’s contribution to the business field even though his early work was very flawed, too heavily weighted toward’s low-end disruptions rather than true innovations — and he’s been spending the last 15 years trying to correct for that and other flaws.

Patrick, how about you try again: the change in privacy policy has little to do with whether or not a shut off the display of ads. It is affecting the personalization of SERPs across all Google services and properties. So, in context, your statement makes no sense, is irrelevant, and misinformed. Usually, that is not the case with you so I guess I’ll apologize for calling you a liar now that I realize you don’t even know about what I was talking about.

Sorry about being so testy. Apology accepted. From what I have seen, nobody was complaining about aligning the search engine results. Do you have an example article about that? I have seen people complain about other uses of the data. But from what I have seen, google does not directly share/sell your data. They attempt to sell clicks and page views obtained by using the data in a way that gets you to click or view. Personally, I don’t view that as obnoxious because I don’t see those ads, so from my perspective they give me some great services at a very low cost.

The other complaint, of course, is the standard complaint that accrues when any database contains too many bits of information about one. As researchers have shown, though, independent third parties can often easily put together such a database. There is no question that google can probably do a better job because of their more direct access to the data, but I have yet to see anything that indicates that they will abuse the data in the same way that, e.g., spokeo or facebook would.

@Tim F.
> I thought you were indicating the rational, analytical principles underlying the predictions. Not pointing out that
> the principles don’t match the results, desired or not.

It seems like you’re overlaying the current state of things on the way things were several years ago. As Patrick has pointed out, the tenacity of the carriers at holding on to the Old Way was unexpected, perhaps foolishly so. Keep in mind, as well, that initially everyone assumed that AT&T would hold Apple to the 5 year exclusive. Interestingly, despite changes in the environment AFTER the early premises were made, the first premise has still held remarkably true.

> Hell, I certainly didn’t expect you to conclude that Eric’s predictions don’t count for much.

This doesn’t surprise me. Your tone and method of response gives you away as the type of internet denizen who delights at veiled insult, deliberate misreading, and pedantic gotchas, not unlike a somewhat sophisticated troll. I’m not amazed to find that you assumed anything whatsoever about me from one or two posts.

“As Patrick has pointed out, the tenacity of the carriers at holding on to the Old Way was unexpected, perhaps foolishly so.”

By whom? Not by me. What was unexpected was Google caving to the carriers’s ways so easily — that was a mild surprise. But I don’t think you can find too many people that would be surprised to find out that carriers would continue to operate based on their motivations and methods rather than for the good of the OSS idealogues.

“Interestingly, despite changes in the environment AFTER the early premises were made, the first premise has still held remarkably true.”

I don’t find this supported at all. Very little “change” occurred. People without much foresight or misguided ideas may have perceived “changes” or shifts in strategy, but if anything, the most change has come from the Google camp — not the carriers, manufacturers, or other platform players.

“Keep in mind, as well, that initially everyone assumed that AT&T would hold Apple to the 5 year exclusive.”

Again, no one that I know that was reasonably informed. Everyone I know knew that it was Apple that was in the position of power and that there were innumerable opt-outs with the relationship being evaluated on virtually a monthly basis.

“I’m not amazed to find that you assumed anything whatsoever about me from one or two posts.”

Again, I don’t find someone trying to argue that there are rational principles underlying the predictions to say that the predictions count for nothing in support of the idea that they are good predictions well supported by reasoned principles.

But I don’t think you can find too many people that would be surprised to find out that carriers would continue to operate based on their motivations and
methods rather than for the good of the OSS idealogues.

This misses the point. It would be more accurate to say that, whether by happenstance, gentleman’s agreement, or collusion, the carriers have somehow agreed to compete on data on anything but price. This is slowly starting to budge. AT&T is supposedly bringing out plans that let you aggregate all your different data devices into a single plan. Verizon is supposedly bringing out family plans.

Also, although the carriers have started to allow you to use unlocked phones on their network — in theory allowing you the choice of non-carrier hardware, the way that AT&T (for example) forces you into a data plan if you stick a SIM card into a smartphone completely blunts the effect of this apparently pro-competitive move, allowing AT&T to charge you for data even if you are so scared of overages that can add up to $16000/month that you keep your phone in “airplane mode” and never ship a byte of data over the carrier’s network.

These developments (or lack thereof) have nothing to do with open source or open source ideologues.

AAPL closed at $350.70 on April 21, 2011 (a Thursday) and $353.01 on April 25 (the following Monday). The market was closed April 22 (Good Friday). So by the time Eric could have dumped his stock on Monday, the most he could have sold it for would have been $353.75 (the high for the day).

AAPL closed today at $446.66, which is $92.91 over the highest price that Eric could have sold his stock for, after his statement.

So, for every 100 share block that Eric could have traded, he would now be down nearly $9300 from the date of his statement.

If you had instead purchased $10,000 of Apple stock at the highest possible price on April 25, 2011, you would now have earned a bit more than 26% on your capital during the ensuing nine months, yielding $12,626.43 before brokerage fees and (short-term capital gains) taxes.

Okay, let’s take the phrase “OSS idealogues” out of it: nothing the carriers have been doing has been surprising to anyone outside of this blog as far as I am aware of. I have never heard a single person say: carriers will love providing low cost, low margin, non-differentiated smart devices without any requirements or restrictions yiedling very low ARPU — they’ll even have to encourage migration away from their networks by allowing data to be tethered or migrated to other devices or networks. I have never even heard anyone say (as far as I can recall): they won’t like it but it will be forced on them — outside of this blog. Or any bizarro world permutation of theorizing the carriers playing into the way Google (and/or OSS advocates) would like to see it play out. So again… where is the “surprising” “change” by the carriers that shockingly threw off the whole damn theory?

Because as far as I can tell, a few individuals not understanding the carriers has now been recast as a surprising wrench in the gears of Eric’s otherwise flawless theory… which is simply nonsense.

There is no evidence for Apple giving kickbacks to AT&T. On the contrary, in the original 2007 contract, AT&T was sharing service revenue with Apple. The contract was amended in 2008, such that AT&T could discount the phone, and the revenue split stopped. It’s also likely that the contract was shortened from 5 years (2012) to 3 (2010).

For example, in July of 2008 we had the very same USA Today reporting that, Under the original iPhone contract, Apple had the right to offer the device to other carriers beginning in 2009.

But instead, in 2008 Apple and AT&T apparently agreed to an extension into 2010, USA Today reported citing â€œpeople familiar with the matter who asked to not be named because the terms are confidential. The reason for the extension? The huge payout AT&T was giving Apple for each iPhone sold, apparently.

And then, in April 2009, The Wall Street Journal reported that AT&T’s exclusive agreement expires next year, citing sources familiar with the matter (that’s inline with the latter USA Today report). They go on to note that, Mr. Stephenson is now in discussions with Apple Inc. to get an extension until 2011.

So if the initial contract had AT&T getting the iPhone exclusively through 2012, why would WSJ and USA Today report that it expired first in 2009, then in 2010? Well, either their sources were flat-out wrong, or (and I think more likely), the contract has changed over time.

In my haste to make my point succinctly, I realize this comment could be misinterpreted:

“I have never even heard anyone say (as far as I can recall): they won’t like it but it will be forced on them — outside of this blog.”

Yes, I have certainly heard and believe myself that the carriers can’t help but ultimately face being made dumbpipes and at some point they will be required to adapt. However, I do not know anyone who has speculated that it would have occured in ’08 or ’09 or ’10 or even today. Everyone I know who is well informed and knowledgable knew that the carriers would be able to put up resistance for many, many years — even riding a wave of greater profits by applying their old methods to new, high cost devices with expensive data services. So, yes, it is reasonable to think that the carriers will have to adapt at some point or face their own demise, but, no, it is not reasonable to presume that anything would have changed anytime between the emergence of Android and now that could be described as an unanticipated change that could not be foreseen and had unintended consequences on any particular theory. I hope that is clearer.

@Larry Yelnick: Ah, yes, the good old days when the EVO 4G on Sprint was going to “hammer” Apple in much the same way Eric always claims every Apple fan says non-exclusivity will narrow the market share gap in the US. Good, old, sweet, ludicrous memories.

Props to “JF Sebastian” for bringing intelligence to that old, misguided conversation. Good digging on you too.

The key network effect for a cell phone is the ability to communicate with other telephones. Texting and voice communications are #1 and #2, in some order. Email is #3. The biggest reason Eric’s wrong about network effects is because he’s pretending OS matters to cell phones as much as it mattered to PCs I. The 80s and 90s.

Two bonus questions there — why did Microsoft’s agreement to release Office on Macs save Apple’s hide, and why was RIM’s secure text messaging so important? The answer to the second question explains both the Skype acquisition and iMessage. One reason why I know Eric isn’t a good analyst in this field was his failure to notice the significance of iMessage; he didn’t even acknowledge what Apple was trying to do. Time will tell if Apple succeeded, of course.

Re: carriers — the one thing I wonder is this. Some data shows iPhone users tend to be higher data users; it isn’t impossible that they thus tend to be more profitable. I dunno. There’s got to be some reason multiple carriers are happy to pay higher subsidies.

Back when esr said, “If I had Apple stock, I’d be selling it now”, he said it in reference to Cathy saying

@Cathy:>Regardless, these risks won’t stop the zany analysts from predicting that Apple will go to $600 a share
@esr:…including that one. This is all sounding eerily familiar from my time in the Valley ten years ago. If I had Apple stock I’d be selling it now.

While Apple’s documentation is very accurate and comprehensive it is not particularly human or intuitive.

And sometimes not even that. I just submitted a revision to my app, and I’ve made it Universal. All of the docs say that the Universal version of icon-small@2x.png must be 58×58. But the Validation tool bitched at me that it needs to be 72×72. It wasn’t until I got on the Apple boards that someone indicated that the spec had changed, but the docs were out of date. I made a quick copy of one of my other icon files and renamed it, and it was validated and accepted for upload.

Little shit like that in dealing with Apple dev docs is infuriating. As much as I love programming for iOS, it can be, at times, an enormous exercise in not killing the fucking dog in frustration.

Shoot. My first full day messing with XCode I crashed it three times, which is more than I usually crash Visual Studio.

I can take Xcode down at will. Have you ever tried to open two files at the same time? Or try this in the debugger: “po [[myObject param] param2]”. That will hammer the debugger to the eventual point of possibly even crashing the entire OS. LLDB is notoriously unstable, and will force Xcode to shit the bed on a regular basis.

Xcode 4 is a huge leap forward for Cocoa/Cocoa touch development. But some aspects of it are so half-baked it’s ridiculous. The hints at what they want to do, for example, with CoreData are intriguing. But actually using the CD editors is a frightening prospect. Always take a snapshot (oh, wait–that’s broken for me too!) before doing anything significant to an already extant CD module.

As much as I disliked working with Microsoft products, I actually enjoyed much of Visual Studio. When I migrated over to Xcode two years ago, it was something of a shock. Apple is obviously putting a lot of resources into upgrading their dev tools to modern standards. But they still have a lot of work to do.

Well, my comment was clearly intended more as a statement of snark than a statement of fact, but I have read what you’ve written, for a long time now, and it seems clear to me that you believe two things:

1) There can only be one winner in mobile, thanks to network effects: “it comes down to whether Apple or Android wins the race to over 50% smartphone market share; after that point, network effects will become self-reinforcing until the next technology disruption” (http://esr.ibiblio.org/?p=2061)

2) That winner will be Android, because of the qualities imbued by its open-source nature: low cost, shorter time to market, carrier-level customizability (http://esr.ibiblio.org/?p=1989)

However, I don’t see strong support for either #1 or #2. And I think that’s partly due to the fallacy of considering Android as the competing product. This isn’t about Android vs iOS, it’s about Android *handsets* vs iPhones.

As it turns out, Android *handsets* aren’t a homogenous product group. Because of this, some handsets will behave like Christensen’s low-end disruptors (see just about anything made by ZTE), but other handsets will behave like high-end incumbents, at least in terms of execution (see the Galaxy Nexus, which has a boatload of “better than needed” features and a “higher than iPhone” pricetag).

It also seems that carrier-level configurability hurts time-to-market (see “time from new OS release until that OS can be deployed to a device” and “lack of motivation for carriers to upgrade devices already sold”), and that carrier-level configurability is increasingly a barrier to entry for the consumer. So cost, time to market, and carrier configurability all seem to be working *against* Android.

The heterogeneous nature of these handsets also seems to be hurting, or lessening, the power of network effects. Fragmentation harms broad adoption of native applications, custom carrier-level extensions try to tie users to the carrier rather than to Google (see MotoBlur), and inconsistent user experience harms portability (users moving from one device to another). Granted, Android-branded phones all integrate through Google’s services, so they’re gaining some network effect there, but there are no significant Google services that can’t also be integrated with the iPhone.

Moreover, the non-branded Android forks we’re starting to see (Kindle Fire, Baidu Yi) threaten the very models on which Google’s Android efforts are based, both the “deploy widely and increase advertising revenues and services adoption” model and the “guarantee that we have an open platform for the future” model.

Do I think Android is dead? No. Do I think they’re on the precipice, about to fall into obscurity? No. Do I think it’s a foregone conclusion that they keep rocketing to 85% market share? Absolutely not. That may happen, but I don’t see that as a certainty – the landscape seems very complex.

The most likely scenario to me is for iOS to stabilize somewhere in the 25% to 35% marketshare region, allowing Android to gobble up the low end of the market (dumbphone replacements).

and the carriers’ poor handling of Android itself via awful skinning, bloatware, and slow updates. Those are whole separate topics in themselves, though they usually gets sucked into the discussion anyway and muddy the waters.

Muddy the waters? Hardly. They’re entirely relevant to the discussion, because they are direct consequences of the “open” system that is Android. Specifically because the carriers have the freedom to exercise their particular design and distribution philosophies, we see a somewhat (depending on who you talk to) fragmented and unsatisfied market. All of these issues are in direct contrast to Apple’s overriding philosophy, and how it manages the carriers in implementing said philosophy. Yes, iOS is closed. But it is also subject to Apple’s rigorous high standards.

There are tradeoffs to each approach. I don’t really have a problem with Android. I’ve said as much before. I like the competition between Apple and Google. We, as consumers, are winning in huge way as a result. Capitalism and Competition for the win!

But you can’t simply dismiss some serious issues that accompany the Android design and distribution philosophy. As much criticism as you level at Apple for the choices it offers, at least as much should be leveled at Google.

They’re entirely relevant to the discussion, because they are direct consequences of the “open” system that is Android

I have tried to make this point before, but nobody wants to listen.

Even if you think that it is best to have an ‘open’ model, for whatever reason, you should be able to admit that there are downsides, and that this is one of them. Some people around here cannot do that.

Bryant, telephony isn’t a strong network effect, it is the feature — it’s more or less legislated as a worldwide, universal right and utility (hyperbole). There’s little way to exploit network effects in telephony beyond the somewhat stalled VOIP market and the often required voice service. Texting is similar to a lesser degree, although richer messaging certainly has high potential for platform barriers and network effects. Ignoring their network effects, I agree these are key. They are the key features that the telecom industry, hoping to stave off disruption, are clawing to maintain “ownership” of (while, at the same time, almost acquiescing to the inevitability of these features migrating to software platforms).

The biggest disruptions to the mobile telecom industry, especially the particularly perverse US market, in the last five years have been (ignoring for the moment the primary technological one — 3G data service):

1. Apple’s lack of compromise (not in the absolute sense, but generally and relatively — there have, actually, been many compromises) with the carrier’s in every regard (device & service features, pricing, price flexibility, shipment sizes, how the device/plan is sold, how the device/plan is activated, branding, customization, etc — “ownership of the consumer experience”)
2. near desktop-quality (and in some ways superior) mobile web browsing
3. Visual VoiceMail
4. BBM, iMessage/FaceTime, and other new, rich messaging services destroying the SMS/MMS racket. (Google Voice has excellent disruption potential but appears to me to have remained niche, somewhat experimental, and region-bound as to have little effect.)

Significant disruption is occurring WHILE the carriers are actually highly motivated to do business with the disruptors.

Or at least, on the one hand: not doing business with Apple is a quicker, more direct death to competing carriers — instead of a more gradual, iterative disruption by a business partner, while successfully competing with direct competitors feeling the same effects, and theoretically being able to innovate out of and into a sustainable new business.

Or on the other hand, for the carriers and manufacturers, Android is the easiest path to least disruption (at least, in their eyes; they are wrong) because it’s “open” and they do not have to commit as much investment in expertise and time as their competitors and disruptors. These same qualities (the ability to modify to your whim, including locking/requiring your antiquated attempts to own the consumer and cheap, not requiring expertise, time, or investment) are cancer. There may be short-term gains, they can share in Google’s platform success stories, they may be kings of the heap for a generation or two of product cycles, but it is certain rot and decay. It’s Android’s greatest disruptive potential: to simply make the device manufacturers and carriers cling to their suckiness and/or suck more and more and more. (I excluded it from the list of disruptions, because it seems wrong to list “making a worse product/providing a worse service” as a disruption.)

But now we get to hear from some that the ability to predict accurately in time has been clouded by the carriers’s unwillingness to cooperate with what they wished would happen.

I didn’t say they’re irrelevant. I said they’re separate topics. Maybe better to say ‘huge cans of worms.’ Discussions tend to get bogged down in discussing the details of those side issues rather than focusing on how they affect the main issue in any realistic sense.

I have never heard a single person say: carriers will love providing low cost, low margin, non-differentiated smart devices without any requirements or restrictions yiedling very low ARPU — they’ll even have to encourage migration away from their networks by allowing data to be tethered or migrated to other devices or networks.

And I’ve never heard a single person say: carriers will love providing high cost, negative margin, non-differentiated (every carrier has the iPhone except T-Mobile) smart devices controlled by a jealous third party yielding the same ARPU as any other smartphone. Wait — were you just saying that?

Anyway, apparently some of the Chinese telecom providers have figured it out:

As a sidenote, there is another interesting morsel buried in that paragraph — the US wasn’t the only market where Apple was managing to extract carrier subsidies. Makes sense, since they were on a single carrier in most markets until recently.

“And I’ve never heard a single person say: carriers will love providing high cost, negative margin, non-differentiated (every carrier has the iPhone except T-Mobile) smart devices controlled by a jealous third party yielding the same ARPU as any other smartphone. Wait — were you just saying that?”

You can’t think of a single intelligent person who would advise a carrier to provide the iPhone? You can’t point to any carriers who don’t have the iPhone making statements about how they want to and hope to gain the iPhone, and who will ultimately accept the same conditions you claim are demonstrably bad for them now because they are getting their lunch eaten? Okay. (Your attempts to claim the iPhone is non-differentiated from the competition or that it provides the same ARPU as any other smartphone also fall flat.)

“ESR made some soft guesses on when the market share collapse will happen, but there have been some unexpected effectors that have skewed things in the short term: the iPad disruption (one could argue for or against this having an effect on phones), the Microsoft zombie getting its claws into the manufacturer, and the carriers’ poor handling of Android itself via awful skinning, bloatware, and slow updates.”

4 factors: the iPad, Microsoft refusing to sacrifice the market, the carriers behaving the only way they know how, and (mushed in) the disadvantages of an open source-flavored strategy. UNEXPECTED!? Skewed!? Short-term!? Let’s take the most surprising “unexpected” factor: the iPad.

To not anticipate Apple providing a mobile touch-based OS to a larger, tablet form in addition to a handheld “phone” form and successfully parlaying that platform universality while introducing new, distinct advantages and disadvantages… It is like playing chess with only the knowledge of how the pieces move. Haven’t the handheld and tablet been predicted by scifi for more than half a century? Haven’t we all been waiting for and working towards the inevitable realizations of the visions of Douglas Engelbart, Alan Kay, and all the R&D factories the world over? Didn’t you follow the Apple tablet rumors, dating back as far as, if not further than, those of the iPhone? Doesn’t it make sense to learn that Apple was working on the tablet version of iOS before the phone version? When you saw the iPhone, one of your first thoughts wasn’t: now give me that in an 8×10 slate form factor? You didn’t anticipate less incentive from manufacturers to excel at tablets in the absence of carrier subsidies and promoted sell-though through carrier and retail middlemen?

Calling the iPad’s success, Microsoft’s and the carriers’s refusal to go gentle into that good night, and the fragmentation and exploitation of open source software “unexpected” is like saying the failure of a crappy sports team due to injuries can be excused as “unexpected” even when you knew most of the roster was old and injury prone. Again, specifically regarding the iPad, failure to see that both form factors are new platforms an order of magnitude greater than PCs that will eventually blur the distinctions between most platforms/form factors creating a market of super-platforms, with each major form having their own business dynamics, specifically in relation to how much they are controlled by carriers and/or other service partners and the content or task types they excel at is to put yourself in a position to make very poor predictions. I’m not even sure what to say about calling the other 3 factors “unexpected” or “short-term” or “muddied waters” or a “can of worm” not to be discussed? Seriously? Unexpected?

You can’t think of a single intelligent person who would advise a carrier to provide the iPhone?

Where did I say that? (Hint: I didn’t. I don’t even agree with that statement — I feel for T-Mobile.)

You can’t point to any carriers who don’t have the iPhone making statements about how they want to and hope to gain the iPhone,

Didn’t say anything about that either…

and who will ultimately accept the same conditions you claim are demonstrably bad for them now because they are getting their lunch eaten?

Who says they need to or will accept the same conditions? Do you even know there are such conditions? How come the price for an iPhone is different at the different carriers?

Your attempts to claim the iPhone is non-differentiated from the competition … fall[s] flat.

Whose competition? If Verizon and Sprint both have the iPhone (pssst — they do), how does having the iPhone help AT&T differentiate themselves from their competition? (hint: AT&T is not competing with Samsung) Oh, yeah, they’re now differentiated from T-Mobile. Sorry, my mistake. Big whoop. It’s so important to have the iPhone for differentiation that AT&T would do anything to lock it in for another couple of years. Oops, my mistake there too — obviously it wasn’t that important. What was your point again? Oh, yeah, you were attempting to put up yet another strawman argument — this time, claiming that I am claiming that Apple isn’t differentiated from Samsung or HTC in any fashion. Well, guess what? I didn’t say that, either. Hmmm, I was writing hastily earlier today, so was willing to give you the benefit of the doubt for misunderstanding what I was writing earlier, but it’s starting to get old.

Your attempts to claim the iPhone … provides the same ARPU as any other smartphone also fall flat.

Actually, if you read some of the more recent analyst reports, and read between the lines on, e.g. AT&T’s quarterlies, I don’t think it does. Hint: For AT&T, ARPU (especially data ARPU) has been consistently on an upward trend, even as iPhones as a percentage of network phones has been on a downward trend. But feel free to ignore all that, as well as the article I provided that shows the same effect in China, by all means.

I was a director at VA Linux for about three years, including both the IPO and the dotcom bust.

I saved the company, once, by driving the decision to purchase Andover Media right after we went public. Mind you, neither I nor anyone else knew it was a save-the-company move at the time, but it turned out that in the post-bust environment a relative slow-growth cash cow of a media business was exactly the right survival asset to have.

I suspect this history counts as time in the Valley by just about anyone’s standards.

You strung together a bunch of descriptors that aren’t very accurate but clearly an effort to describe the iPhone and presumably to suggest that this was undesirable to carriers. You now admit that not having the iPhone is even less desirable than your made up scenario.

“Who says they need to or will accept the same conditions? Do you even know there are such conditions? How come the price for an iPhone is different at the different carriers?”

Continuity of carrier relationships with minor variations across 90 countries and 200 carriers and Apple’s historic fixity tells me so. Know I do not know all of the conditions, but I do know that Apple’s volume price is standardized regional and that Apple does not restrict carriers’s options to price at retail.

I fully understand your differentiation argument. And, yes, I think the iPhone, even when offered by multiple carriers in the same region and excluding carrier customizations still provides greater differentiation from Apple’s competitors and from the carrier’s competition than offered by the myriad Android offerings even if through its complete lack of differentiation. I acknowledge that this is a soft, difficult to support view but I did not misunderstand.

“Hmmm, I was writing hastily earlier today, so was willing to give you the benefit of the doubt for misunderstanding what I was writing earlier, but it’s starting to get old.”

Wasn’t it your misunderstanding that I was concerned with the display of ads rather than the integration of personalized SERPs across all Google properties?

“Hint: For AT&T, ARPU (especially data ARPU) has been consistently on an upward trend, even as iPhones as a percentage of network phones has been on a downward trend. But feel free to ignore all that, as well as the article I provided that shows the same effect in China, by all means.”

I am looking at the same data. I don’t think you can get close to demonstrating direct causality between providing the iPhone and declining ARPU, but if you’d like to demonstrate, I’d look at your analysis of the data.

but clearly an effort to describe the iPhone and presumably to suggest that this was undesirable to carriers.

No, clearly an effort to describe that the subsidy of the iPhone is detrimental to the carriers. They have let Apple snooker them into a bad position. Yet another misunderstanding.

You now admit that not having the iPhone is even less desirable than your made up scenario.

A carrier that doesn’t have an iPhone will lose customers who feel they have to have one. But of course, most of those are already on AT&T. I have no made-up scenario, and therefore no admission to make.

Who says they need to or will accept the same conditions? Do you even know there are such conditions? How come the price for an iPhone is different at the different carriers?

Continuity of carrier relationships with minor variations across 90 countries and 200 carriers and Apple’s historic fixity tells me so. Know I do not know all of the conditions, but I do know that Apple’s volume price is standardized regional and that Apple does not restrict carriers’s options to price at retail.

Interesting. So you agree that T-Mobile wouldn’t have to go about it the same way as the other carriers, and that, in fact, none of the carriers need to go about it the way they have. It’s a choice. Apparently tactical, not strategic, given that device replacement rate was 10% at Verizon last quarter, meaning that they will never dig themselves out of that subsidy hole unless they work up the courage to either reduce the iPhone subsidy or to lengthen the contract period.

I fully understand your differentiation argument. And, yes, I think the iPhone, even when offered by multiple carriers in the same region and excluding carrier customizations still provides greater differentiation from Apple’s competitors and from the carrier’s competition than offered by the myriad Android offerings even if through its complete lack of differentiation. I acknowledge that this is a soft, difficult to support view but I did not misunderstand.

Hmmm, I was writing hastily earlier today, so was willing to give you the benefit of the doubt for misunderstanding what I was writing earlier, but it’s starting to get old.

Wasn’t it your misunderstanding that I was concerned with the display of ads rather than the integration of personalized SERPs across all Google properties?

You didn’t make your objection clear. But I did make it clear that “Me: I’m actually fairly happy with google. AFAIK they don’t sell or share my information. They just use it to calculate what ads they would show me if I had my browser configured to show ads. If you have any other hard information on what they do with any knowledge of me, please feel free to spill it.” So my apparent misunderstanding of your position led me to disagree with you and explain why I didn’t think what google was doing was problematic and invite you to clarify what google was doing with the data that you found objectionable. Yet you ignored that invitation, and instead simply used your apparent ongoing misunderstanding of my (IMO extremely clear statement of my) position to brand me a liar rather than to explain your position. IMO, you still haven’t given any cogent reason why cross-product SERP optimization is an affront to your sensibilities, but I’m sure you have a good one. I’m probably too dumb to understand it, though, which is why I never realized the horrors of the situation to begin with. Yes, you’re terribly misunderstood.

Yes. Microsoft’s death-claw itself wasn’t unexpected; what WAS unexpected was that the manufacturers practically gave in without a fight. We knew an Apple tablet was coming but what WAS unexpected was a.) the form and b.) the success, given the device’s limitations. In retrospect it’s a logical move, and very typical of Apple, but still unexpected in degree.

> Skewed!? Short-term!?

Yes. As in, those factors have caused compasses to go wild for a short period as things readjust.

> I’m not even sure what to say about calling the other 3 factors “unexpected” or “short-term” or “muddied waters”
> or a “can of worm” not to be discussed?

@Pinhead
“How then do you ascribe the growth in Mac marketshare the last 8 years? ”

The question is why Apple could increase their marketshare against the Wintel network effects. Now that is a simple question.

The UI’s are so alike that the learning curve is not that steep. Basically, the Windows network effects stem from communication and exchange between computer users.

To interact with Windows users, you need to be bit-compatible in Windows communication and file formats. The communication part more or less sorted itself out due to the standardization of network and the Internet protocols. Every platform can now be bit-compatible on Ethernet/TCP/IP/HTTP/HTML/FTP/CIFF/SMTP etc.

The second part is file exchange. The fact that MS felt forced to supply a bit-compatible version of Office+Exchange+Sharepoint for the Mac took care of that. With the age of Apple and its niche markets, there are now bit-compatible implemetations of all the necessary applications. That is a major difference with Linux, which never got a bit-compatible implementation of MS Office (and some other applications, eg, Photoshop). So, while it is (almost) possible to swap out a company desktop Windows PC with a Mac without tripping up work flow processes, that leads, by design, to severe problems with Linux (e.g., Exchange, Sharepoint, Office macros).

For network effects to favor MS Windows of Mac OSX, there must be friction in the communication and exchange between Windows and OSX users. And currently, there isn’t any friction anymore. OSX even uses the same (Intel) hardware.

So you see why Apple could undercut (over-cut?) MS despite the network effects. They could match Windows interactions bit-by-bit.

If/when Android swamps out iOS, Apple could simply do the same again and add a Dalvik VM to iOS. They would get instant access to all Android apps. The downside would be that there would be much less incentive to write iOS apps and their App store would starve. But maybe they could get around that too.

You can’t just substitute in ‘over-cut’ as though it means the same thing as ‘undercut’. Apple isn’t undercutting MS, so lack of friction isn’t a sufficient explanation for growth in Mac market share. There needs to be something that is driving actual competitive growth, and in this case it’s probably the superior quality of the OS and the computer hardware. Or, you know, everyone is being brainwashed by Apple’s marketing division, whichever you prefer.

previous arguments about the stickiness had to do with things like the app store.

@PapayaSF

Some of the stickiness is due to the App Store: iPhone buyers buy more apps, and thus have less of an incentive to switch to an Android phone.

Right. Certainly that is true, but what you are describing is more like lock-in than a network effect. You might argue that there is a development network effect. Apple’s app store generates more revenue for developers so they continue to get more and better developers than Android. You can see the positive feedback cycle there.

I don’t know whether that is true or not, but I guess that’s about the only network effect I can imagine.

And it is interesting that this ‘network effect’ is not just a product of the *number* of users the platform has, but also very much about what those users do with the platform. Obviously Android has more users, but Apple developers are (according to this network effect argument anyway) seeing more revenue. Other developers see this and flock to the platform.

@Tom: I can confirm that developers are, on the whole, making significantly more from Apple’s App Store than from Android’s Marketplace (with exceptions, of course). However, I can also say with a high degree of confidence that this seems to be driven in part by the culture of Apple (users trained to purchase via phone). Development costs are generally higher on Android compared to iOS, but this is a smaller issue – it’s adoption (people finding and paying, preferably en masse) that’s the larger driver, from my experience.

I’ve got 4 Android devices and 9 iOS devices readily accessible right now – three guesses what I do for a living… >)

Smartphone owners working for big business are activating far more iOS devices than they are Android ones – at least those who employed by firms using Good Technology’s corporate email system are.

If there is a collective stampede of corporate customers changing from Blackberry to iPhone just before the new year, that could explain part of the upsurge. It would also explain why the CEOs of RIM resigned.

@esr, June 7th, 2010: “But I will make one hard prediction with important consequences. There will never be another quarter in which iPhones exceed Androids in U.S. unit sales.” – http://esr.ibiblio.org/?p=2057

> I don’t know whether that is true or not, but I guess that’s about the only network effect I can imagine.

The positive feedback loop of more developers -> more users -> more developers is, in fact, a paradigm of a network effect. Another is more users = more places to turn for answers to questions = more users. These are all standard. There are other components, but the network effects for both Android and Apple are stronger than many here are assuming.

A lot of Android handset makers are wasting some potential network effects (consistency of UI across handsets), but they are still there.

>I think it’s time to back off Eric for a little while. This piling on is getting ridiculous. If he cared, he would acknowledge it.

I’ll care when and if actual userbase and marketshare numbers show that Apple is improving its competitive position against Android smartphones. So far, we don’t have any actual evidence of this. “Evidence” would constitute, at minimum, a month in which Android fails to increase its lead, and we haven’t had one of those.

When and if that changes, I will acknowledge and discuss the facts. Until it changes, the usual fanboy ranting is just the usual fanboy ranting. I’ve heard it all so many, many times before.

To the extent that prediction was inaccurate, I think that would be due, in large part, to (a) the willingness of carriers to offer subsidies for iPhones that, in some cases, are 2.5x larger than those for Android phones, and (b) the unwillingness of carriers to update their offerings to attract additional smartphone customers. For example, the simple expedient of not requiring a data plan for a customer willing to buy a smartphone outright would probably work in the carrier’s favor — at least some of those customers would realize that WiFi doesn’t cut it and sign up later, and they wouldn’t even require a device subsidy.

As discussed earlier, it is not at all clear to me that Apple users generate more ARPU than Android users. Certainly not the $10/month it would take to justify an extra $250 (from $150 -> $400) subsidy over 2 years.

As far as additional service offerings, I used to despair that these would never come. Now I realize that they are coming slowly. Both AT&T and Verizon have announced plans to introduce some sort of shared data services this year. And another carrier business model seems to be to let MNVOs experiment with different business models and pricing strategies, and then emulate or buy (e.g. Virgin Mobile) the successful ones. Speaking of which, has anybody here had any experience with either TruConnect or platinumtel?

“To my knowledge we haven’t had one of those yet. Yes, I know you’re hoping 4Q2011 is it; but that remains a hope and not a fact.”

So you’re going to completely disregard the following numbers? Are you waiting for Sprint (which now has the iPhone 4S) and T-mobile to report?
If the following numbers were reversed, you would have started a new “The Smartphone Wars” post about it.

AT&T released earnings numbers: 7.6M/9.4M smartphones sold were iPhones. 81%.
Verizon released earnings numbers: 4.3M/7.7M smartphones sold were iPhones. 55%

Add them together, you get 11.9/17.1 were iPhones. 70% of smartphones sold via the two largest US careers were iPhones. 30% were Android/BB/WP7.

Verizon and AT&T’s numbers aren’t definitive for you? Do you have a more reliable way to track unit sales than financial reports from the actual companies? Or are you betting on Sprint and TMobile making up the gap?

I’m not sure when Sprint will post Q4 2011, but for Q3 2011 they didn’t split out unit sales, simply noting that they added 1.3 million net subscribers and 8% of their 32.9 million postpaid customers upgraded… so maybe around 4 million handsets sold, max, in Q3.

TMobile’s Q3 2011 numbers are *really* murky, probably to try to obscure how bad the situation is over there. They’re losing subscribers like crazy, and issued guidance that iPhone 4S was probably going to make Q4 worse than Q3.

The gap reported by AT&T / Verizon combined is 5.2 million more iPhones than non-iPhones. I don’t see how it’s possible to cover that gap with Sprint + TMobile. And it’s unlikely that they will report unit sales, so… maybe we’ll never know for sure. But the numbers sure look good for Apple and not-so-good for Android, at least this quarter.

I can think of another very good reason that this quarter’s iPhone sales are killing it: pent up demand for the iPhone 4S + the holiday season + the halo effect (iPad and Mac sales also hugely up for Apple).

Of those, only the halo effect is sustainable for Apple, so I’d expect that this quarter’s performance won’t be repeated next quarter. If it turns out that iPhones *do* outsell Android phones in the US this quarter, I wouldn’t expect that trend to continue, based on what seem to be the primary drivers.

But I’m not going to deny what the numbers look like this quarter based on what happened last quarter, what I hope will happen this quarter, or what I think might happen next quarter.

Instead, hopefully the numbers are informing what I think will happen this quarter and next quarter, and the data from past quarters informs how I interpret this quarter’s numbers. Denying that the numbers have a clear implication seems silly to me, whether that implication is absolutely definitive or not…

The iPhone pops at AT&T and Verizon are large, but not wholly unexpected. AT&T has most of the iPhone faithful for historical reasons, and if you track the numbers you will see a pattern of (a) a lot of upgrades right when a new phone comes out, and (b) a lot of new people getting old iPhones right after that. Verizon is a little different. Verizon didn’t sell nearly as many iPhone 4 handsets at launch as the pundits expected, and one of the putative reasons for this is that people were waiting for a summer launch of the iPhone 5. When the 4S came out in the fall, there were a lot of people who went ahead and bought it because they’d been waiting a long time. There were also a lot of people who bought the 4, because the 4S wasn’t perceived as that much better, and the 4 was now on sale.

In any case, due to the difficulty of getting accurate, hard numbers from all the players, this is quite possibly the best that can be shown for Apple last quarter. The question then becomes: with both the launch of the 4S and the holiday season behind us, and the iPhone 5 not here yet, what happens in the next couple of quarters?

I think Apple has an interesting balancing game to play in the domestic market. Yes, Verizon sold a lot of iPhones. But they sold over half as many 4G capable Android phones as they did iPhones. Assuming that 4G isn’t all hype and that people will want it, and remembering that all those Apple sales represent customers who most probably won’t be getting the iPhone 5 when it first comes out, and noting that Verizon is pushing its 4G rollout really hard, Apple is in an interesting position. If they bring out a 4G phone too early, they will piss off a lot of recent customers. If they bring out a 4G phone too late, they will cede a lot of the market.

Rumors are that the 4G iPad will come out before the 4G iPhone. I think this makes sense. It shows customers that Apple is working on 4G, it gives Apple a 4G platform with a bigger battery than its phone, and it will ameliorate some of the worries about whether people should wait for the iPhone 5 or simply buy an Android. But a lot of people will simply buy the Android.

Yes, the holiday/halo effect/pent-up demand was, as we agree, huge, and I’ve discussed those before. But I think those were already effectively taken into account in esr’s prediction (because they are not unprecedented, and already show up in the data), and the carrier actions might not have been (because we have only recently gotten to the apparently slowing overall domestic market growth, where by “market” I mean “number of people carrying smartphones,” not “number of smartphones sold this quarter.”)

it’s pretty obvious at this point that iPhone outsold android in q4 in the US.

The real question is whether it’s a spike or not. And does the US success translate the international market? It seems that it does, but it is dampened.

I maintain that iPhone will stabilize marketshare somewhere in the 30s in the US. I see no evidence that the winner take all scenario is going to happen.

I was wondering if WP7 would have some success, but Nokia only sold “over a million” Lumias. Seems like a disappointment. MSFT is supposedly going to make a giant WP7 push in 2012. And they are kicking back money to the mobile sales people. But at this point, it looks bleak for WP7.

>Are you waiting for Sprint (which now has the iPhone 4S) and T-mobile to report?

I’m waiting for whole-market measurements taken with methods that have been consistent over time. Presently comScore is the only public source of such numbers I know of; if you can point at a better one, my mind is open.

As Patrick Maupin has repeatedly pointed out, a lot of these carrier sales waves turn out to be upgrade-driven rather than taking in new customers. So these figures may not tell us anything much more than that Apple is very good at upselling its base – which is not exactly news.

>If the following numbers were reversed, you would have started a new “The Smartphone Wars” post about it.

No. If you look back at the Smartphone Wars series, you’ll see that I do very little with quarterly sales figures or the hype around individual new products. This is because, I have said repeatedly, I think the forces driving the evolution of the smartphone market are broader and deeper than those surface phenomena. I try to stay more focused on that level – well, when I’m not just having fun with some silly piece of corporate melodrama.

I’m not sure what you mean by “esr’s point that his prediction might not be inaccurate”, since as far as I can tell @esr hasn’t seen any evidence that his prediction is inaccurate.

But the Nielsen numbers are interesting, I agree. On the face of it they look like a particularly negative trend for Android, but when the numbers first came out I didn’t put any stock in them, because… it’s a survey. A pretty small survey, actually (maybe as small as 25,000 subscribers). So at the time I thought “that’s interesting, but let’s wait for some hard numbers.”

And now we have them. And it looks like Apple had a killer quarter, but I agree with you – it doesn’t seem like those results are sustainable. Oppenheimer even said so in the earnings call.

Personally, I think Apple’s focus is going to increasingly be on software and services, and less so on hardware upgrades. iPad 3 is going to a high-resolution display, in all probability, and *maybe* to LTE, but I’m not sold on that. But where can they take the iPhone, really, from a hardware perspective? There’s not much innovation there that’s interesting to them, I think.

So I think Apple’s strategy is going to increasingly involve iCloud and related services like Siri, and they’re going to try to keep sales numbers high by amplifying the halo effect. But that to me looks like a maintenance strategy, not a growth strategy.

That’s why I think they’re going to stabilize somewhere in the 25% to 35% marketshare range, and I think they can probably hold that position for a few years while they ramp up whatever the long-term iPad strategy is…

One last thing I will mention. We’ve seen this pattern before at AT&T where things didn’t add up. I came to the conclusion that a lot of used phones sold at AT&T (which show up in their numbers) never made it back through Apple.

This makes sense from another standpoint — if Apple sold all the phones that AT&T and Verizon sold, then it makes their international vs. domestic sales ratio look pretty bad, considering the number and sizes of non-domestic markets they are in.

Yeah, I was running those numbers, too, but then I realized that most of their international markets opened later in the quarter, and some big ones (including China) haven’t opened yet. So I’m not sure how much to read into that…

If you want to wait for comScore, that’s fair enough. But comScore doesn’t report unit sales, so the only way I can think to cross-check your unit sales prediction is to look at earnings reports of the various carriers.

I’m not sure what you mean by “esr’s point that his prediction might not be inaccurate”, since as far as I can tell @esr hasn’t seen any evidence that his prediction is inaccurate.

No, he hasn’t. But he does seem to acknowledge that there may be data out there that shows his prediction is inaccurate — “To my knowledge we haven’t had one of those [a quarter when Apple sales exceed Android sales after the quarter in question] yet.”

I lived in NYC until about 18 months ago, on AT&T. I was getting excellent data speeds, close to the theoretical 3G max using SpeedTest. But the latency was on the order of 2-10 seconds for every request. It was just like overloaded airport Wifi, and more or less unusable for everything but email. For some reason latency is never provided in speed comparisons between handsets/networks. Anyhow, it seems obvious that having a 4G phone is not going to solve the latency problem.

Unless something has changed radically in the ensuing year and a half, I would not put much stock in the idea that 4G is a strong differentiator in urban US markets. In Europe I can report that it is an entirely different story on 3G – the same handset became miraculously useful when I moved here – but the 4G rollout here has been ridiculously slow.

Given the things I’m trying to understand and predict, a unit sale is interesting only when it changes the size of a product’s userbase. Apple’s upgrade sales to its existing customer base and Android’s upgrade sales to its loyal costumer base are both relatively uninteresting.

If you want to wait for comScore, that’s fair enough. But comScore doesn’t report unit sales, so the only way I can think to cross-check your unit sales prediction is to look at earnings reports of the various carriers.

I don’t think you can get there from the comscore numbers and I doubt that Eric does either. There will be other analysts looking at various data sources to determine domestic smartphone shipments, and there will be TMobile and Sprint. But just looking at postpaid at the 4 major carriers doesn’t cut it any more. There is a lot of prepaid Android action going on.

My gut feeling is that we will be left with essentially the same situation as with the Nielsen numbers — too close to call.

But even though the comscore numbers won’t reflect any purchaser who upgraded his iPhone and either stuck the old one in a drawer as a backup or sold it to some poor shmuck who dropped his and couldn’t afford a new replacement, they will (I believe) accurately, if slowly, reflect what matters to me (and, I think, to Eric) — the number of people carrying around different kinds of smartphones at a given moment in time.

That’s interesting. I knew that AT&T, in particular, had problems in New York, in particular, but I didn’t realize they were that bad.

You are right that bandwidth and latency are not always fungible, but sometimes a lack of bandwith can, in fact, cause latency problems. ISTM that 4G could, in fact, help fix this if the latency was due to congested airwaves rather than due to the backhaul, which seems likely in New York.

If status is a significant driving factor (and it is certainly a viable argument that owning an iPhone was a status symbol early on) in the current market, then this is a fair question. If it really is, then I would expect a drop-off in iPhone sales this year.

I don’t know. We’ll see. I personally don’t believe this to be a factor. But I’m just an Apple fanboi. ;-)

Well, I think we’re in violent agreement here, but a clarification to you clarification: If, in fact, Apple did sell more units domestically than Android, then that data already exists , fragemented into millions of proprietary individual sales reports. The question is actually a two-parter — first, whether or not this lucky event (for Apple) actually occured, and second, whether (as you point out, in the future, because it hasn’t happened yet) somebody will actually be able to piece together enough of that data to accurately and credibly show the world that the lucky event did, in fact, occur.

You seemed to care about unit sales at the time that you made the prediction. But if that’s not really what you care about, that’s up to you. But I’m not sure how to chose only the predictions that you’ve made in the past that you still care about now, so it’s probably best that I don’t refer back to any of your previous predictions.

However, I do think that unit sales are a significant part of the overall story, so I’m surprised that you don’t care about them. Unit sales give another dimension to interpreting market share data, for example. Knowing that large unit sales had little effect on market share or that moderate unit sales had a disproportionately large effect on market share is instructive, I think. And can affect predictions and such.

When I look at this unit sales data, it seems clear to me that *something* happened, and it was something significant. How significant? I don think we can know until we see the comScore numbers. Perhaps it’s all upgrade sales – that suggests something about Apple’s trajectory. But perhaps it’s not – either way the unit sales are significant in interpreting the data.

And, just to be clear, I don’t single out Apple in this way – I’ve looked over the earnings reports from HTC and Motorola and Samsung to try and understand why Samsung’s so much more profitable, and how that might affect the future of Android. And I’d *love* to get Kindle Fire numbers – something’s happening there and I’d love more insight into what it is. I’m waiting to see what happens with Baidu Yi, and how that might affect “branded” Android in China. Et cetera.

The positive feedback loop of more developers -> more users -> more developers is, in fact, a paradigm of a network effect. Another is more users = more places to turn for answers to questions = more users. These are all standard. There are other components, but the network effects for both Android and Apple are stronger than many here are assuming.

This is, obviously, one of the factors that was driving Apple into the dustbin of history in the 90s. The network effect around Wintel was a massive machine, and Apple struggled to not just bring new developers into the fold, but to keep its existing crop from cutting bait. Look at the hysteria around Jobs getting the cash infusion and the Office for Mac guarantee from Gates. I personally believe that if MS had decided to stop development of Office for Mac, that Apple would have folded. That would have had a ripple effect (reverse network?) of profound consequences in the dev community. Say goodbye to Adobe, for example.

I know I’m not saying anything new or revealing to people here. Just wanted to bring it to the forefront as an example.

Thinking about it, one of the possible reasons for the shortfall between the percentage of iPhones at Verizon and ATT landed at 55% and 80%, respectively, might be the iPhone 3GS. Verizon did not have a “free” iPhone option to compete with the “free” Android options.

Exactly. We first saw this discrepancy in the first quarter of this year, when AT&T sold more iPhones than Verizon, despite all the surveys showing that 127% of Verizon subscribers were going to jump on the iPhone on release day.

“But the Nielsen numbers are interesting, I agree. On the face of it they look like a particularly negative trend for Android, but when the numbers first came out I didn’t put any stock in them, because… it’s a survey. A pretty small survey, actually (maybe as small as 25,000 subscribers).”

I do market research for a living. N=25,000 is not a small survey! You can make good predictions with a much smaller sample.

The key is not sample size (provided you have a certain minimum sample), but rather making sure that your sample is unbiased (which is why you cannot simply poll those most eager to take said survey), balanced demographically (e.g., has the same demographic distribution as the larger population it is modeling), and otherwise reflective of the potential buyer population.

I rarely do surveys with more than N=3,000 respondents, and I don’t think I’ve ever done a survey with more than N=13,000 for any reason. In areas where incidence is high (e.g., everybody buys food), you can often go with only N=300.

>I’m not sure how to chose only the predictions that you’ve made in the past that you still care about now

Er, I think I care about all of them. in the sense that I want to know if they’re false to fact.

One or two have turned out to be false – I under-predicted the prompt sales of the Verizon iPhone, for example, and acknowledged that (but I also under-predicted Android sales in the same period, so the overall outcome wasn’t a surprise). My prediction about unit sales is interesting because it’s a consequence of a larger theory about carrier adoption and consumer response; even though I don’t care a lot about unit sales per se, I want that prediction to stand as a test of the theory.

There are a couple of factors, and some numbers, that need to be examined more closely. I don’t have links, so I can’t back up what I’m saying. I do know that I’ve read these numbers in the past.

1) According to several reports from around the middle of last year, the return rates of iPhones vs. Android phones was significantly different. Apple reported that they’re seeing somewhere between 1 & 2% returns on the iPhone. I think even during the “scandal” around antenna-gate, it was that low. Android, on the other hand, was (and may still be; I don’t know) between 30 & 40%. That’s enormous, in my mind.
2) The firms that track mobile web usage have consistently reported much higher usage by mobile Safari. If I remember correctly, it’s in the 60-70% range.
3) As mentioned previously, the ratio of apps purchased on the iPhone vs. Android is significantly higher. Again, somewhere in the 70/30 to 60/40 range.
4) I’ve not done any Android development. It’s on my radar. But I’m intentionally not doing it right now, until I get a solid foothold in the iOS market. I’ve talked with several other app developers over time, though, and their feedback is consistent. They see a much higher sales rate on the iOS versions of their apps. Across the board. In fact, a good friend of mine says he still hasn’t seen an ROI for all the time and money he’s put into Android development. He’s doing it because his customers want the cross-platform availability. But the payoff hasn’t happened yet.
5) One article I read last year stated that an enormous percentage of Android phones being sold are extraordinarily cheap (quality-wise) handsets manufactured and sold in China. All they really are are phones. The fact that Android is driving them is completely inconsequential. The users only use them as phones and for texting. They can’t even surf, because the devices are simply not powerful enough. Much less use apps.

All this to make the point that, while raw numbers are definitely worth looking at, there’s a larger picture here that needs to be examined. Which is, of course, what @esr has been trying to do for a few years. But I think the big picture is consistently different from what Eric is portraying & predicting. I would submit that were Eric’s interpretation accurate, the stats quote above would be significantly different. Simply because the network effect that we’ve been bandying about would be forcing an entirely different outcome:
1) Returns would be much lower for Android, simply because the UX would be quite different.
2) mobile web browsing should be the reverse of what they currently are.
3) App usage (and subsequent development investment and ROI) would be waaaaay higher on Android; and lower, obviously, on iPhone.

Now, I may very well be missing something fundamental here. Or my numbers could be significantly out-of-date (or simply wrong). But I think what I’m seeing is much more consistent with the “real” world than what Eric is seeing.

> Android, on the other hand, was (and may still be; I don’t know) between 30 & 40%. That’s enormous, in my mind.

Unsupported FUD.

> The firms that track mobile web usage

Seem to be really useless.

> the ratio of apps purchased on the iPhone vs. Android is significantly higher.

Sure. This is a consequence of the iPhone historically being a high cost item. I expect this trend to continue, but to weaken as more low-cost iPhones are sold.

One article I read last year stated that an enormous percentage of Android phones being sold are extraordinarily cheap (quality-wise) handsets manufactured and sold in China. All they really are are phones. The fact that Android is driving them is completely inconsequential. The users only use them as phones and for texting. They can’t even surf, because the devices are simply not powerful enough. Much less use apps.

Would like to see a cite for this. Hard to believe that it’s already true that Android CPU/memory requirements are already small enough, and porting easy enough, that Android has made inroads here. But if this is true, my take on this is completely different than yours — this is hugely consequential.

> Returns would be much lower for Android, simply because the UX would be quite different.

I don’t think anybody has done a survey of “android returns.” But even if they had, it would probably be meaningless, skewed by the worst vendors, and would not do anything to show iPhone superiority against the best Android handsets. Of course, a good study could be done, that would ask questions like “did you return an Android phone?” “What did you buy afterwards?” Unlikely to see.

> mobile web browsing should be the reverse of what they currently are.

Mobile web browsing stats are crap. But to the extent that you believe them, note that Facebook’s Android apps has a higher number of daily unique users than their iOS app.

> App usage (and subsequent development investment and ROI) would be waaaaay higher on Android; and lower, obviously, on iPhone.

How do you know that app usage isn’t higher? Your prediction of the consequences of that is, uh, interesting to say the least.

As Tom says, the Nielsen numbers make it difficult to construct a plausible scenario in which iPhones outsold Android phones in 2011Q4. Thus, I don’t find all the ZOMG AAPL RECORD QUARTER!!! hyperventilating very interesting. Nor am I going to do some kind of end-zone dance if, as I expect, the March comScore numbers stay on-trend for the last four or five months rather than breaking in Apple’s favor. If the pattern of previous episodes of busted hype is followed, the pro-Apple trolls will slink away in embarrassment for a while, only to resume full-throated baying a few months later when Apple marketing next rings its little bell.

The more interesting question is this: we’ve seen a slowdown in Android’s growth rate recently. It hasn’t been matched, so far, by a significant improvement in Apple’s relative position. There are some signs that the whole market is changing character, aggregate demand softening and more of it coming from late adopters who are more interested in value-priced phones than high-end ones. What’s really going on here? Are we seeing the end of the easy dumbphone conversions or is something else happening?

Android, on the other hand, was (and may still be; I don’t know) between 30 & 40%. That’s enormous, in my mind.

Unsupported FUD.

Yeah, I have to agree. Actually I can’t even imagine that such a return rate is possible. If it were true that 30-40% of Android handsets were being returned then there would be no vendors still manufacturing them. It would be a completely unsustainable business.

However, we know from Google directly that 2/3 of their mobile web traffic comes from iOS devices. That alone should be pretty indicative that iOS users are browsing the web far more than their Android counterparts.

> Android, on the other hand, was (and may still be; I don’t know) between 30 & 40%. That’s enormous, in my mind.

Unsupported FUD.

Like I said, I don’t have links. Wish I did. But I remember reading the articles, and they were based on a survey (or surveys; don’t remember now) done of several retailers around the world. It was supposed to be pretty comprehensive. Of course, I can’t verify this myself. But it seemed pretty straight-forward.

> The firms that track mobile web usage

Seem to be really useless.

Care to elaborate on that? Why? Wouldn’t actual, you know, usage of the phone for something besides calls and texting be a significant data point? Are their methodologies flawed? If so, how? Do you have something better?

> the ratio of apps purchased on the iPhone vs. Android is significantly higher.

Sure. This is a consequence of the iPhone historically being a high cost item. I expect this trend to continue, but to weaken as more low-cost iPhones are sold.

Huh? Doesn’t compute. I don’t understand your point. What does the cost of the phone have to do with people actually buying additional apps? Is this some sort of psychological mumbo-jumbo about users telling themselves “Oh, I spent so much money on my iPhone! I now have to justify and rationalize it by buying more apps!”

Yeah….

> One article I read last year stated that an enormous percentage of Android phones being sold are extraordinarily cheap (quality-wise) handsets manufactured and sold in China. All they really are are phones. The fact that Android is driving them is completely inconsequential. The users only use them as phones and for texting. They can’t even surf, because the devices are simply not powerful enough. Much less use apps.

Would like to see a cite for this. Hard to believe that it’s already true that Android CPU/memory requirements are already small enough, and porting easy enough, that Android has made inroads here. But if this is true, my take on this is completely different than yours — this is hugely consequential.

Yeah. Wish I knew where I saw it. I just googled it, to see if I could dig it up, but no luck so far. I’ll keep digging.

I see your point, though. But I think I disagree. Part of the current argument, if I’m not mistaken, is that marketshare is being determined by mindshare. But if these piece-of-shit throwaways are making up a significant percentage of sales, then there’s no mindshare involved. Yes, day-to-day sales are influenced by these purchases. But there’s very little money being made off of them. And there’s no loyalty to Android being developed by these purchasers at all. And the marketplace for Android apps is not nearly as broad as the raw numbers would lead us to believe. Which is supported by the results being seen by app developers.

> Returns would be much lower for Android, simply because the UX would be quite different.

I don’t think anybody has done a survey of “android returns.” But even if they had, it would probably be meaningless, skewed by the worst vendors, and would not do anything to show iPhone superiority against the best Android handsets. Of course, a good study could be done, that would ask questions like “did you return an Android phone?” “What did you buy afterwards?” Unlikely to see.

See above. There have been surveys. Reliable? Fair question. But they’re out there. And on what basis do you declare them “meaningless”? Letting your assumptions drive you analysis? Shouldn’t it be the other way around?

And of course the results would be skewed by the worst vendors. But those vendors are a part of the Android cloud. You can’t discount them. Just like I won’t discount the higher quality vendors. They matter. They’re all a part of the picture we’re trying to paint.

> mobile web browsing should be the reverse of what they currently are.

Mobile web browsing stats are crap.

Again, you assert this. Please support.

But to the extent that you believe them, note that Facebook’s Android apps has a higher number of daily unique users than their iOS app.

Thanks for the Facebook numbers. I don’t recall seeing that before. Good to know. Link?

> App usage (and subsequent development investment and ROI) would be waaaaay higher on Android; and lower, obviously, on iPhone.

How do you know that app usage isn’t higher? Your prediction of the consequences of that is, uh, interesting to say the least.

I should clarify that by saying “paid” app usage. In other words, we’d be seeing a reverse of what we see now wrt paid apps on both platforms. Sorry for the confusion.

Please keep in mind that I’m not “the enemy”. Yes, I really like Apple products. I’ve been a fan for decades. No, I don’t really have a problem with the walled garden enforced by Apple. I do understand why others would, though. I’ve got no complaint or ire directed towards them. I completely support the drive for open environments and software. It’s a good thing. I think the competition between Apple and Google has been tremendous. I’m cheering it on full-throatedly. I have some significant complaints about how Apple manages the app development process. If Google keeps pushing the envelope, then I fully expect Apple to clean up its act in this space. Win-win.

And I’m also interested in a reality-based conversation. I want to see analysis that is as objective and fact-based as possible. Which is why I’m participating here. Yes, we have our interpretations. Welcome to the human race. But I’m trying to keep as much bias out of my thoughts and interpretations as possible.

@esr>“But I will make one hard prediction with important consequences. There will never be another quarter in which iPhones exceed Androids in U.S. unit sales.”

@esr> To my knowledge we haven’t had one of those yet. Yes, I know you’re hoping 4Q2011 is it; but that remains a hope and not a fact.

As @Louis 4 stated, AT&T has reported that 7.6M of the 9.4M smartphones it sold during Q4 were iPhones. That’s 81% iPhone.
Verizon reported 4.3M of 7.7M Smartphones were iPhones, so 55% of all smartphones sold by Verizon during Q4 were iPhones.

When you add up AT&T and Verizon, 11.9M of the 17.1M that the two largest carriers in the US sold were iPhones. That’s 70% combined.

What are you waiting for, Eric? Are you waiting for Sprint to report? They’ve sold iPhones during Q4, too. And given the deal they took to even be able to sell the iPhone, they’ve been pushing it toward their customer base.

Are you hoping that T-Mobile had a blowout quarter selling Android phones? T-Mobile is already on-record stating that they’re losing customers, and that they need the iPhone to reverse that.

@esr> I’m waiting for whole-market measurements taken with methods that have been consistent over time. Presently comScore is the only public source of such numbers I know of; if you can point at a better one, my mind is open.

The simple fact is that the comscore methodology is flawed. They interview a set of people (“more than 30,000″ according to the December 2011 report), and extrapolate to the entire market. Your reliance on these numbers is understandable, but fundamentally unsound.

What the AT&T and Verizon (and Apple) numbers represent is real “cash on the barrel” sales to real customers during Q4.

The top 4 wireless telecommunications service providers in the United States, from largest to smallest by the number of current subscribers, are:
Verizon Wireless (107.7 million) [http://aboutus.verizonwireless.com/ataglance.html]
AT&T Mobility (103.2 million) [http://www.att.com/gen/press-room?pid=22304&cdvn=news&newsarticleid=33762]
Sprint Nextel (51 million) [http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzk1MDg5M3xDaGlsZElEPTQyNDA2OHxUeXBlPTI=&t=1]
T-Mobile USA (34 million) [oft quoted number during the failed AT&T acquisition reports, T-Mobile's Q3 (released in Nov) results say 33.7M]

So AT&T and Verizon Wireless represent 210.9M out of 295.9M total US wireless customers between the top 4 carriers. 71% of the customers at the top 4 carriers are at AT&T or Verizon. 70% of the smartphones sold during Q4 at these two carriers are iPhones. We don’t have the numbers from Sprint.

comScore says 234M total US subscribers, btw.

Here is what T-Mobile had to say about iPhone 4S in its last 10Q:

The quarter-over-quarter improvement in net customer additions was driven by improvements in both contract and prepaid gross additions resulting from the introduction of unlimited Value plans discussed above and growth of prepaid unlimited Monthly 4G plans. This growth may be impacted in the fourth quarter of 2011 due to competitor launches of the iPhone 4S.

and

“Attractive prepaid offerings helped us add customers in the third quarter of 2011 and data ARPU grew as smartphone adoption continued to increase. Discipline on the cost side contributed to year-on- year margin improvement, while postpay churn, in particular related to the iPhone 4S launches by competitors, will continue to be an area of concern.”

So, they’re worried. So worried they’re warning that even though they managed to add customers during Q3, they know it won’t last for Q4. In fact, they didn’t manage to add smartphone customers (the adds were due to ‘pre-paid’ customers). Read and weep:

Contract net customer losses, including connected devices (as defined in Note 1 to the Selected Data, below), were 186,000 in the third quarter of 2011, an improvement from 281,000 net contract customer losses in the second quarter of 2011.

HEY NOW, we’re not losing Smartphone customers as fast as we were!

Eric, you can wait around for the comScore “we asked 30,000 people what they thought” numbers to reflect reality, or you can get on the train with the big boys and use real financial data.

This has been discussed at length here before. There are legitimate reasons to doubt web browser statistics. We know that Android web browsers do not always correctly identify themselves. That said, I believe that it is absolutely possible to do robust web statistics, but the problem is that most surveys we see have proprietary methodologies that cannot be audited.

This has been discussed at length here before. There are legitimate reasons to doubt web browser statistics. We know that Android web browsers do not always correctly identify themselves. That said, I believe that it is absolutely possible to do robust web statistics, but the problem is that most surveys we see have proprietary methodologies that cannot be audited.

Well, given that the primary consideration is mobile Safari vs. mobile not Safari, and I’ve not heard anything indicating that Safari stats are skewed or fucked up, this seems like a red herring. Across the board, mobile Safari is taking around 70% of the mobile browser traffic. Whether or not Android is identifying itself correctly seem completely irrelevant in that context.

Your point about the proprietary nature of the methodologies is fair. But that the numbers are so consistent across the board would indicate to me that either a) they’re all using the same methodology; b) using different methodologies, but intentionally slanting the numbers to favor Apple; or c) coming up with similar numbers because they’re all seeing essentially the same thing–mobile Safari is far and away the most used mobile browser on the market.

Hmm. Just re-read your post and see a possible different point you are making. Are you saying that Android web browsers aren’t even identifying themselves as mobile? If so, then yes, that is entirely relevant. Do you have any cites for this? I’m curious how widespread the issue is.

Thanks for the response. These are fair counter-points. I appreciate it.

aren’t even identifying themselves as mobile? If so, then yes, that is entirely relevant. Do you have any cites for this?

When we were discussing this a while back some Android users chimed in with UA strings from their devices. Not only were they sometimes not identified as mobile, but some of them were identified as mobile safari!

Just using UA strings is a foolish way to do browser stats. Like I say, it is possible in my opinion to do it robustly. But, we don’t know if they are.

Actually anecdote *is* evidence. We have evidence that there are Android devices out there that do not correctly identify themselves. You are right that we don’t know how widespread the issue is, but we have enough evidence to cast legitimate doubt over web browser statistics.

@Larry Yelnick:
“The simple fact is that the comscore methodology is flawed. They interview a set of people (“more than 30,000? according to the December 2011 report), and extrapolate to the entire market. Your reliance on these numbers is understandable, but fundamentally unsound.”

Thanks for telling me that my entire career — which consists of “interview[ing] a [sub]set of people and extrapolating to the entire market” — is fundamentally unsound and worthless.

Fortunately, my employer doesn’t agree.

Your failure to understand the validity of well-designed market research is breathtaking. Yes, surveys and other research techniques can be poorly designed, or they can be explicitly designed to give the result that marketing & sales want to claim. But good research can indeed describe the behavior of the entire market accurately by polling a subset that population.

As others have commented, the sales figures that you love so much don’t distinguish between upgrades of existing users vs. new users. For discussions focusing on market share, this matters.

>But good research can indeed describe the behavior of the entire market accurately by polling a subset that population.

Indeed. Another reason to lean on the comScore numbers is that, unlike carrier or vendor quarterlies, comScore doesn’t have any obvious incentives to fudge them.

I’ll probably surprise most of the trolls by saying that I think Apple’s reporting is usually pretty honest. On the other hand, I really, really don’t trust carrier numbers. You know those guys are lying when their lips are moving.

They are going to have to have some big android #s to out number iPhone.

Android on T-Mobile is likely to have 90%+ smartphone share. Sprint is an unknown. Together these carriers make up, what? 40%, 35% of the market? That is more than enough leeway for Android to make up for low numbers on the top two carriers.

Together with the Nielsen numbers that evidence makes me *far* from sure about whether the iPhone can take the top spot for Q42011. It’s possible, but I doubt it.

Anyway, we don’t have to guess! The com score numbers should be out fairly soon. So, why not just wait for a full picture before making up our minds?

Your failure to understand the validity of well-designed market research is breathtaking.

How do you deal with recruitment bias? This kind of thing reeks of social “science”.

TBH I don’t understand the point of this whole thread unless you’re going to speculate on the market. I have a serious suggestion for Eric: set up a long-term prediction game based on real market data. Then people can (almost) put their money where their mouth is.

@Cathy: Thanks for telling me that my entire career — which consists of “interview[ing] a [sub]set of people and extrapolating to the entire market” — is fundamentally unsound and worthless.

OK, Cathy, tell us how you would setup to “scientifically interview” 30,000 people (13 and older, in the US) every month, who have just purchased a smartphone, while eliminating potential sources of bias, and making sure that the results are reflective of the general population.

And, given that “You can make good predictions with a much smaller sample.”, why does Comscore go to the expensive of scientifically interviewing 30,000 people every month?

I didn’t say your career is fundamentally unsound and worthless. I said that the comScore data (what we see of it) is worthless for what Eric is attempting to do with it. I’m a cellular microbiologist, I make statistical inferences from smaller samples several times a week. :-)

@Tom: Android on T-Mobile is likely to have 90%+ smartphone share. Together these carriers make up, what? 40%, 35% of the market? That is more than enough leeway for Android to make up for low numbers on the top two carriers.

Didn’t both Louis4 and I both just show that AT&T and Verizon are 70% of the market? OK, that is a bit over-stated.

If you look at the top 8, Sprint and T-Mobile have 25.3% together. (Verizon and AT&T have 63% if you look at the top 8.)

So the iPhone is available to 78.4% of the US subscriber base. (CSpire (with 700K subscribers, or 0.21%), also has the iPhone 4S.)

Thats statistically close (“Hi Cathy!”) to 3 out of every 4 potential buyers. Before 2011, only 31% of the available market (AT&T customers), could buy an iPhone. This is when Android made its huge inroads. The situation has changed underfoot.

On AT&T, the iPhone accounted for about 80 percent of the smartphones AT&T activated in the fourth quarter of 2011, up from 70 percent just before Randal Stephenson made his vow to “very aggressively” market competing smartphones in early 2011 when AT&T lost exclusivity.

While we don’t know how many of those iPhones were upgrades, we do know that most of the iPhone activations were upgrades for people who were already AT&T subscribers. AT&T gained a net 717,000 subscribers on contract plans in the quarter. That was the best result all year, but didn’t match Verizon’s 1.2 million. AT&T has been lagging Verizon in this metric for more than a year.

Both AT&T and Verizon Wireless have taken a profit hit just to sell the iPhone to their customers, yet they both still carry it, and pay the price (and take the hit), because (as should be obvious), that is what their customers demand. Sprint will likely also announce a hit to profitability due to massive iPhone sales. Sprint reportedly commited to pay Apple $20 billion for 30 million iPhones for the next four years. Despite this, Sprint CEO Dan Hesse and his leadership team have been nothing but ecstatic over getting the iPhone, with one executive likening it to “getting a seat at the cool kids’ table”.

The carriers, meanwhile, are falling over themselves paying for the privilege of selling the iPhone. Even with all of its potential financial drawbacks, T-Mobile USA, the only national carrier not to get the iPhone, desperately wants to have it. At a press conference during CES, T-Mobile CEO Philipp Humm acknowledged the lack of the iPhone had hurt the company’s ability to keep subscribers.

At this point, the iPhone is like a drug, and the carriers are hooked. The question isn’t whether it’s worth it, it’s whether they can get by without it.

“All in, I continue to be a big-time bull on the smartphone category and the iPhone in general,” AT&T CEO Randall Stephenson, earlier today, during the Q4 earnings conference call.

The reason for his bearish view of the company is that Zabitsky believes the competing Android mobile operating system from Google “will change the playing field entirely” with its latest 4.0 update, also known as Ice Cream Sandwich. He says the experience on the updated platform is on par with Apple’s iOS.

Too bad ICS runs on so few phones sold during the past year. I’m sure that CyanogenMOD will soon fix that, and all will be right with the world.

If the Android fanboys here wanted to bleat about something worthwhile, they could complain that Apple has contracts with them that have Ts&Cs that make “pushing” Android phones a financially poor decision. Now that the carriers are hooked on iCrack, it will be difficult for them to ween themselves from it. I’m sure there are “must take” terms in those contracts. The carriers will pay for the phones even if their customers aren’t buying them.

The situation is somewhat like Microsoft’s offer to PC OEMs, where a copy of Windows was sold with every PC, even if it shipped with Linux (or BeOS, or Novell, or…).

> I wasn’t speaking of fudging specifically in Apple’s favor, just saying that in general I don’t trust carrier numbers.

Because you don’t understand that “material statements” now have to prove true. Your experience in the Dot.Com world is from before Sarbanes-Oxley and a suite of similar laws. (VA Linux being part of the catalyst that drove such laws to be written, though, to be fair, nowhere near as much as Enron.)

This is a consequence of the iPhone historically being a high cost item. I expect this trend to continue, but to weaken as more low-cost iPhones are sold.

Huh? Doesn’t compute. I don’t understand your point. What does the cost of the phone have to do with people actually buying additional apps? Is this some sort of psychological mumbo-jumbo about users telling themselves “Oh, I spent so much money on my iPhone! I now have to justify and rationalize it by buying more apps!”

Apple soaked up a lot of the price-insensitive early adopters. Price-insensitive (e.g. rich) people will probably spend more on apps. As Apple starts selling more down-market, I expect that their average user will appear to have tighter purse strings.

I see your point, though. But I think I disagree. Part of the current argument, if I’m not mistaken, is that marketshare is being determined by mindshare. But if these piece-of-shit throwaways are making up a significant percentage of sales, then there’s no mindshare involved. Yes, day-to-day sales are influenced by these purchases. But there’s very little money being made off of them. And there’s no loyalty to Android being developed by these purchasers at all. And the marketplace for Android apps is not nearly as broad as the raw numbers would lead us to believe. Which is supported by the results being seen by app developers.

No, I don’t think you do see my point. There are network effects in the supply chain, too, not just for end users. One reason that PCs got so cheap was the market became so big that more suppliers participated. If Android is really cheap enough to put on featureless phones, then a lot more suppliers will be aiming to supply components for Android handsets. These network effects feed into each other. For example, the Windows network effects were so strong on hardware that Apple eventually threw in the towel and revamped its Mac lineup to use “PC” hardware.

See above. There have been surveys. Reliable? Fair question. But they’re out there. And on what basis do you declare them “meaningless”? Letting your assumptions drive you analysis? Shouldn’t it be the other way around?

I have seen some “surveys” and those were discussed and demolished here, because they were vendor puff pieces that were put together badly and presented worse. You asserting that there are possibly other surveys is not data. Let’s see something.

And of course the results would be skewed by the worst vendors. But those vendors are a part of the Android cloud. You can’t discount them. Just like I won’t discount the higher quality vendors. They matter. They’re all a part of the picture we’re trying to paint.

Yes, I can discount them, unless you (a) show real results with real vendor names, and (b) show what the users bought (Apple, Android, etc.) after returning the supposedly crappy phone. The article you found is the same one I remember from the time. Went looking, didn’t find any real data. Here’s at least one of the discussions:

App usage (and subsequent development investment and ROI) would be waaaaay higher on Android; and lower, obviously, on iPhone.

How do you know that app usage isn’t higher? Your prediction of the consequences of that is, uh, interesting to say the least.

I should clarify that by saying “paid” app usage. In other words, we’d be seeing a reverse of what we see now wrt paid apps on both platforms. Sorry for the confusion.

And I should clarify by stating that my starting assumption — that Android users are cheap — means that proportionately more Android users will be drawn to free apps, so measuring network effects by seeing how well paid apps sell might lead you to misleading conclusions. (But, as discussed, this starting assumption is probably changing, as Apple is going more down-market.)

Do you have evidence that (especially the AT&T numbers) completely reflect Apple sales? That no used iPhones were sold by the carriers that didn’t go through Apple? We saw exactly this pattern a few months after the release of the iPhone 4 at AT&T. Undoubtedly they’ve gotten faster at turning around used phones.

>Because you don’t understand that “material statements” now have to prove true.

Oh no, I get that all right. I think it’s gamed around a lot.

>Your experience in the Dot.Com world is from before Sarbanes-Oxley and a suite of similar laws.

No, SarbOx was a live issue during my last couple board meetings, actually – I’m not sure it had actually passed then but the reporting requirements were already pretty common knowledge. Later on I had to deal with it directly because it affected even OSI.

>VA Linux being part of the catalyst that drove such laws to be written

VA Linux itself was not part of the input to SarbOx. I know because as a board member I was in the sights of the SEC investigation – they didn’t interview me, but I was fully informed. Because of that, I also know that the board and management of VA were cleared of any wrongdoing; the shenanigans were at the investment bank that handled the IPO, Credit Suisse First Boston.

For those who never followed the flap, CSFB was handing IPO shares to favored clients under murky circumstances. I never did figure out what page of SEC regulations was violated, but I do know that nobody at VA was involved. I don’t think we ever had a flim-flam artist on board – well, except for one marketing executive I should have trusted my instincts about from the get-go, and he got fired for cause.

You didn’t separate out prepaids from postpaids. Verizon and AT&T sure do when it comes to iPhone availability…

> Because you don’t understand that “material statements” now have to prove true.

That’s why these “material statements” are very carefully worded to be “materially misleading” without being “materially false”. For example, go to any recent AT&T investor briefing PDF, and then explain to me why they talk about how many iPhones were “activated” and how many Android phones were “sold.” But contemplate, first, how many users might buy new or used Android or Apple phones from elsewhere, and what they might do to these numbers.

> Now that the carriers are hooked on iCrack…

They think everybody cares. The whole industry has deluded itself into thinking the health of a carrier hinges on how many iPhones its users wield. This leads to ridiculous statement fudging like the above.

I’d have (and in fact predicted as much; I was apparently very wrong) expected a significant percentage of new sales last quarter to be the 3GS. I absolutely was predicting, if not an outright major, at least a large minority of all new iPhone sales to be the 3GS. Free ain’t bad. And the 3GS is still a great phone.

But that didn’t happen. So I’m not sure what you’re premising your conclusions on. And the simple fact is that app sales have continued to increase. If what you’re saying is true, then I’d have expected a leveling out for the iPhone. Hasn’t happened.

And don’t manipulate my words. I didn’t “assert” there were possibly other surveys. This is what I said:

Like I said, I don’t have links. Wish I did. But I remember reading the articles, and they were based on a survey (or surveys; don’t remember now) done of several retailers around the world. It was supposed to be pretty comprehensive. Of course, I can’t verify this myself. But it seemed pretty straight-forward.

I said “I remember reading the articles”. That is not asserting. That is relying on my memory. I thought what I’d read had been based on an actual survey. What I’ve found today (which I actually linked to) looks to bely that memory. I’ve said as much, and have, for the moment, withdrawn that part of the argument:

The point made in the second article is completely valid: the 30-40% number quoted is a) from an “industry source”; and b) only for “some” handsets.

Neither of which make for a fair conclusion at all.

I’ll keep digging. But if that’s all there is, then I remove this piece from the argument.

Thanks so much for acknowledging my self-correction. :-/

Stop being such a prick, and so manipulative, when people disagree with you. There really is such a thing as having a civil conversation.

And I should clarify by stating that my starting assumption — that Android users are cheap — means that proportionately more Android users will be drawn to free apps, so measuring network effects by seeing how well paid apps sell might lead you to misleading conclusions.

If this is true, then it’s a problem for Android. Y’see, ISVs go where they will get paid. In the mobile space that means iOS. The Mac ecosystem works this way as well: it’s possible for someone to write a well-polished Objective-C application or add-on that does only as much as a five-line Python program — and sell it for $15 or maybe even more. The Apple UX is worth real money to its user base.

Without app support Android becomes a glorified feature phone. With crappy app support — which is what it has today — it becomes a ghetto and a malware vector.

“If Apple were going more down-market, then why were almost 90% of all new US iPhone sales the 4S?”

Or more simply: why has the iPhone ASP been holding steady (since after the early carriersubscription-sharing fluctuations balanced out) or even increased now at the high of $660 (again since an earlier historic high that was accomplished shortly after the change in carrier sub-sharing). But Patrick has been floating this downmarket theory for a while without evidence.

Apple has diversified its smartphone portfolio; it has not moved downmarket one inch in a general sense. In fact, in addition to adding lower cost options they’ve added higher cost, upmarket options as well, creating a diversified mix that has not affected the ASP at all.

If Apple were going more down-market, then why were almost 90% of all new US iPhone sales the 4S?

That’s an interesting datapoint, way different than the 57%/43% split reported by Nielsen for acquirers during the last 3 months. I don’t have time right now, or I’d try to look into the methodology.

I’d have (and in fact predicted as much; I was apparently very wrong) expected a significant percentage of new sales last quarter to be the 3GS. I absolutely was predicting, if not an outright major, at least a large minority of all new iPhone sales to be the 3GS. Free ain’t bad. And the 3GS is still a great phone.

But that didn’t happen.

How do we know? Two conflicting data points…

So I’m not sure what you’re premising your conclusions on.

The Nielsen report, the fact that AT&T sold lots of iPhone 3xx even in Q1 of this year, etc.

And the simple fact is that app sales have continued to increase. If what you’re saying is true, then I’d have expected a leveling out for the iPhone. Hasn’t happened.

Are they increasing at the same rate? Note that I’m not positing that rich people will stop buying iPhones, rather that more poor people are buying them as well now, due to increased subsidies.

And don’t manipulate my words. I didn’t “assert” there were possibly other surveys. This is what I said:

Like I said, I don’t have links. Wish I did. But I remember reading the articles, and they were based on a survey (or surveys; don’t remember now) done of several retailers around the world. It was supposed to be pretty comprehensive. Of course, I can’t verify this myself. But it seemed pretty straight-forward.

That’s some of what you said. But I quoted the thing you said that I was responding to immediately before the response I assume you are addressing, e.g. the only place where I used the word “assert”:

See above. There have been surveys. Reliable? Fair question. But they’re out there. And on what basis do you declare them “meaningless”? Letting your assumptions drive you analysis? Shouldn’t it be the other way around?

I have seen some “surveys” and those were discussed and demolished here, because they were vendor puff pieces that were put together badly and presented worse. You asserting that there are possibly other surveys is not data. Let’s see something.

Now, to me “they’re out there” looks like an “assertion” of the existence of more than one survey showing this, but of course, YMMV.

I said “I remember reading the articles”. That is not asserting. That is relying on my memory. I thought what I’d read had been based on an actual survey.

And I remember reading what I just quoted again from you, which I also quoted right before the search.

Thanks so much for acknowledging my self-correction. :-/

I didn’t read that second post carefully enough to notice the correction — I had the text from your first post in the browser window and was typing into it.

Stop being such a prick, and so manipulative, when people disagree with you. There really is such a thing as having a civil conversation.

I’m often intentionally a prick, but actually wasn’t trying to be one in this case. Perhaps Tom DeGisi can tell me where I went wrong — he’s better at this stuff than I am. I went back and looked at our interaction. I have to admit I was blunt, but I would be interested in knowing exactly what provoked this reaction in you. BTW, if you’re at all interested in self-examination, when I look back, a couple of your own comments stand out as being relatively provocative, such as:

s this some sort of psychological mumbo-jumbo about users telling themselves “Oh, I spent so much money on my iPhone! I now have to justify and rationalize it by buying more apps!”

Yeah….

and:

Letting your assumptions drive you analysis? Shouldn’t it be the other way around?

Just FYI.

I’m willing to engage. But not when you’re being an asshole about it.

Without more to go on, I have no idea why you believe I’m misbehaving. But whatever.

2011 is now in the rear view mirror, Linux didn’t achieve critical mass on the desktop.

“Specifically, Eric believes that the desktop operating system for the next 30 years will be determined in the next 5 years, and if Linux has not achieved critical mass on the desktop by 2011, we will have 30 more years of Windows.”

Or more simply: why has the iPhone ASP been holding steady (since after the early carriersubscription-sharing fluctuations balanced out) or even increased now at the high of $660 (again since an earlier historic high that was accomplished shortly after the change in carrier sub-sharing). But Patrick has been floating this downmarket theory for a while without evidence.

You’ve been willfully ignoring my point about carriers selling more iPhones than Apple (due to used iPhones) and my point about carriers supplying higher subsidies for Apple phones. Both these allow for downmarket customers to buy Apple without negatively impacting Apple’s ASP. But you obviously already know that. And, like Larry Yelnick (or even more so, since you work for Apple), I expect you to be completely silent on why AT&T reports Android “sales” and Apple “activations.”

In any case, you’re missing the point that there is an equilibrium. The Android system is so big that some vendors will make good money there. The fact that more vendors can make reasonable money in the Apple ecosystem is something for the vendors to contemplate, but I sincerely doubt that most mainstream users will know or care that they have a slightly smaller app selection.

We had this discussion a couple of months ago. IIRC, the best example of where Apple shines over Android was music generation apps. That’s a big deal and a win for Apple (just like content creation is on the Mac), but it’s not going to drive the broader market. There are obviously several questions here about whether Android can catch up in that segment, whether there are other similar segments where Apple is ahead and likely to stay there, whether there are enough such segments to make Apple enough subjectively better to kill Android. My gut says no way in hell, but time will tell.

The Mac ecosystem works this way as well: it’s possible for someone to write a well-polished Objective-C application or add-on that does only as much as a five-line Python program — and sell it for $15 or maybe even more. The Apple UX is worth real money to its user base.

Yeah, that’s price-insensivity. There are luxury home builders and tract house homebuilders. The best homebuilders in both categories can be immensely profitable, but there are a lot of abject failures, as well.

>You’ve been willfully ignoring my point about carriers selling more iPhones than Apple (due to used iPhones)

Honest question because I haven’t followed your argument on t this before. Do you have any reason to suspect that refurbs are not going through apple? It was my understanding when I work for apple that all the refurbs were done by apple and therefore I would be counted in apples numbers

It may well be that every iPhone that AT&T sells goes through Apple. I don’t know. But that’s why it’s annoying that AT&T reports “activations.” As in, if you get a used phone somewhere else and get a new SIM card.

And Apple seems to lowball the price for a used phone. They can do a lot of refurbs that way because of inertia — people in the Apple store doing a trade-in. But a lot of customers buy/sell iPhones outside AT&T/Apple:

“You’ve been willfully ignoring my point about carriers selling more iPhones than Apple”

No, I have other things to do. Sometimes I can focus on a thread, sometimes I could care less.

“You’ve been willfully ignoring my point about carriers selling more iPhones than Apple (due to used iPhones) and my point about carriers supplying higher subsidies for Apple phones. Both these allow for downmarket customers to buy Apple without negatively impacting Apple’s ASP. But you obviously already know that.”

I don’t see the point. Subsidies are a part of any smartphone manufacturers ASP. Subsidies aren’t only being paid to Apple. Again, you can offer a diverse portfolio without moving down market. You will have to articulate better what your point is because I really, simply am not seeing it.

“And, like Larry Yelnick (or even more so, since you work for Apple), I expect you to be completely silent on why AT&T reports Android “sales” and Apple “activations.”

I didn’t see this and don’t know what point you are referring to.

Here’s a simple assumption: if I do not respond to every single word you say, it’s more likely that I have other things to do than that I am willfully ignoring you out of fear of responding. I can’t even imagine what there is to be afraid of or needing to avoid.

And can we stop with the childish ad hominem please. I run a goddamned PC repair shop — 90% of my time is spent on supporting/using Windows and Android. (Mac and iOS device repairs/support take far less time.) I use Windows, Mac, Android, and iOS personally.

I don’t see the point. Subsidies are a part of any smartphone manufacturers ASP.

But they are higher for Apple phones. E.g. $150 for an Android phone or $400 for an Apple phone in some cases. So they positively impact Apple’s ASP compared to Android vendors.

Subsidies aren’t only being paid to Apple. Again, you can offer a diverse portfolio without moving down market.

$0.99 phones with the same lowest price contract that any smartphone user gets are (currently) about as downmarket as it gets for postpaid smartphones.

I didn’t see this and don’t know what point you are referring to.

You claim that Apple’s ASPs being steady are evidence they are not going “downmarket.” I am pointing out that Apple’s ASPs are as disconnected from end user reality as any vendor could hope for — a breathtakingly brilliant accomplishment to be sure, but an accomplishment that doesn’t support your theory.

I run a goddamned PC repair shop — 90% of my time is spent on supporting/using Windows and Android. (Mac and iOS device repairs/support take far less time.) I use Windows, Mac, Android, and iOS personally.

Interesting to know. You write as if you have a much higher level of involvement at higher levels, and in a manner which seems quite slanted towards Apple.

“But they are higher for Apple phones. E.g. $150 for an Android phone or $400 for an Apple phone in some cases. So they positively impact Apple’s ASP compared to Android vendors.”

And? How does this affect what you are trying to declare, that Apple is moving down market?

“$0.99 phones with the same lowest price contract that any smartphone user gets are (currently) about as downmarket as it gets for postpaid smartphones.”

To me, offering a low cost option is not the definition of “moving down market.” If this is what you mean, fine. I think you are using the phrase poorly, but fine.

“I am pointing out that Apple’s ASPs are as disconnected from end user reality as any vendor could hope for — a breathtakingly brilliant accomplishment to be sure, but an accomplishment that doesn’t support your theory.”

And this is where the confusion lies: a phrase like “moving down market” is usually applied from the enterprise perspective. It is not looking up from the consumer perspective. And from Apple’s perspective: they have not moved downmarket one iota, they’ve actually moved further up while providing a more diverse portfolio that reaches into the low end.

Um, what? I’ve mistakingly called you a liar once because I believed you had purposefully changed your statements right before my eyes. You had already called me “wanker” for what reason I am unaware. If having my opinions, expressing them, and defending them “provokes” you, I believe that is your problem, not mine. Several of us have independently noted you getting bent out of shape for little reason on several occasions.

I can’t remember which thread, but some time ago I linked to a story that quoted a wireless telcom company president as saying that in effect Apple’s pricing of the iPhone combined with subsidies was eating all the profit in the smartphone customer revenue stream. The conclusion inferred that a iPhone smartphone customer was breakeven to the telcom while Apple went home with all the profit. I’m still puzzled how long the telcoms selling Apple iPhone will continue to permit that.

“If you don’t consider that justifies my characterization, you might want to think carefully about the difference between what you think you present as and how you actually present.”

If you think my views are “only a bit in touch with reality,” you are very poor at perceiving anyone’s character, represented or actual. But that’s me: diagreeing with the notion that a custom ROM developer opening a store and reaching a million installs is a significant landmark event in the “Smartphone Wars” — you know, an “average fanboy.”

And? How does this affect what you are trying to declare, that Apple is moving down market?

You obviously figured it out by the end of your post, so I won’t bother answering that.

And this is where the confusion lies: a phrase like “moving down market” is usually applied from the enterprise perspective. It is not looking up from the consumer perspective.

In my experience, it is almost always from the consumer perspective. But don’t take my word for it. Go look in a dictionary, and you will find terms like “Appealing to or designed for low-income consumers.” When the price drops, it is appealing to low-income consumers, and I’ve been hearing for years now that Apple is actually designed for everyman (including, one presumes, low income consumers) and Android is for geeks.

If having my opinions, expressing them, and defending them “provokes” you,

Obviously, things I write “provoke” you too, to the point of you calling me a liar.

I believe that is your problem, not mine.

I don’t have a problem. You asked, essentially, if I could change how I respond to what you write. I asked if you could write differently in order to get the responses you seem to desire.

Several of us have independently noted you getting bent out of shape for little reason on several occasions.

I haven’t actually been “bent out of shape” in awhile now, certainly not in any threads on this post. Just because when I see you acting like a wanker, I call you a wanker, doesn’t mean that you’ve gotten under my skin (although I’ll admit that you did manage to do that a long time ago, which just means that I call you out on your behavior sooner now). When you offered what seemed to be an apology for your own behavior, I likewise apologized. And I meant it. If you don’t act like a wanker I’ll sincerely attempt to keep from calling you one.

The conclusion inferred that a iPhone smartphone customer was breakeven to the telcom while Apple went home with all the profit. I’m still puzzled how long the telcoms selling Apple iPhone will continue to permit that.

I think it all comes down to fear of what Wall Street thinks about the iPhone, churn, and ARPU. It doesn’t help that T-Mobile is blaming the results of its own poor execution on the lack of an iPhone. As long as Wall Street believes this message and that T-Mobile is doing all it can to acquire the iPhone, management is safe.

“You obviously figured it out by the end of your post, so I won’t bother answering that.”

If I understand your intention, I still disagree with you: Apple has moved up market as much as it has moved down market. So just saying one rather than both is not useful to me when discussing their entire market share in aggregate.

“Go look in a dictionary, and you will find terms like “Appealing to or designed for low-income consumers.””

Run a business; the literature on “moving down market” is extensive, using the phrase implies, to me, a business strategy which fundamentally has different goals, execution, and financials than what Apple is doing. If you want to simply discuss the impacts of providing a low cost offering, rather than the business strategy and fundamentals, and to the exclusion to the impacts of moving up market and finding a sweet spot, that’s also fine. But, as far as I understand what you are saying, you aren’t doing so — you are ignoring the move up market as well.

“I’ve been hearing for years now that Apple is actually designed for everyman (including, one presumes, low income consumers) and Android is for geeks.”

I do not gain anything insightful from this. In your world view, are geeks inherently wealthier than the everyman? Is geekdom and everymannery mutually exclusive? Are middle-class and lower-class people incapable of perceiving the value of a higher cost item and choosing to make that purchasing decision?

“Obviously, things I write “provoke” you too, to the point of you calling me a liar.”

You said to “Easy to turn off.” (what I’m turning off, how am I to know, I thought it was the topic I was discussing as you were responding to me, I certainly wasn’t thinking of using an Adblocker, third party tool to alter a feature of the software in question, to shut off ads when I was talking about the consolidation and inter-sharing of personal information across Google properties, but whatever… misunderstandings happen) after you had said the alternative was to not use Google (which actually did seem on point with what I was discussing and I agreed was the only alternative after Google had previously offered more granular and private options). To me, rapidly shifting from Don’t Use Google to You Can Turn It Off (and presumably what IT is is what I am talking about since you were responding to me…) and I said that there was no opt-out or shutting off of the feature, but you insisted I could turn it off, again after seemingly agreeing that there was no other alternative but to not use or log into any Google services… To me, that seems like lying. As SOON as I realized YOU were misunderstanding ME — I retracted and apologized to you. Of course, this was all after you calling me a “wanker.”

“I asked if you could write differently in order to get the responses you seem to desire.”

I think polite discussion doesn’t require insults. I do not see any reason to respond to what I write with “WANKER” or “since you work for Apple.” I think my writing has been in line with such expectations of a polite discussion.

Feel free to explain how these responses are accurate, helpful, information, condusive to discoure, intelligent, showing maturity, simply polite, or not “provoked.” Maybe we can politely discuss that.

“Just because when I see you acting like a wanker, I call you a wanker, doesn’t mean that you’ve gotten under my skin (although I’ll admit that you did manage to do that a long time ago, which just means that I call you out on your behavior sooner now). When you offered what seemed to be an apology for your own behavior, I likewise apologized. And I meant it. If you don’t act like a wanker I’ll sincerely attempt to keep from calling you one.”

Since the Oct. 14, 2011, debut of the iPhone 4S, 53 percent of new iPhone buyers have introduced their old phone into the secondary market. Of those, 49 percent were iPhones, 21 percent were BlackBerrys and 15 percent were Android devices.

So, as expected, a lot of iPhone 4S sales were upgrades, and a lot of old handsets got resold or gifted and reactivated. Quite possibly those would count as two activations at the carrier — one for the new phone and one for the old phone. But we can’t know for sure, despite Larry Yelnick’s assurances that the carriers have to open their kimonos and show us everything about the iPhone numbers.

A resold or gifted iPhone will often eventually show up in comScore’s numbers. But the other thing we have to remember is that phones often live fast and die young. There’s a lot of abuse. So a lot of the resale iPhones might be going to replace others that have died on contract. It’s quite a sticker shock when your $0.99 iPhone 3xx dies and you try to replace it, and you have to keep paying the contract price. (Same thing to some extent with Android, although you can usually get a replacement Android cheaper.)

With carriers like AT&T telling us how many iPhone “activations” there were (counting third party sales) and how many Android “sales” there were (not counting third party sales), and not bothering to give us enough information to know how many of their customers currently carry Android phones or carry iPhones, we are left to rely on third parties like comscore and Nielsen to try to figure it out.

And, FWIW, I think comscore and Nielsen’s data have been agreeing with each other pretty well lately, so despite the reservations of some here, I don’t think they are bad data by any means.

“It’s quite a sticker shock when your $0.99 iPhone 3xx dies and you try to replace it, and you have to keep paying the contract price.”

Have you done so yourself? Over the five generations, I do not know of a single iPhone user who wasn’t immediately handed a replacement iPhone over the counter, with a quick activation and migration of data, at no charge, even when out of warranty, for a defective unit. I know of about 6 or 7 people who had difficulty after breaking or soaking their phones but never for defective units.

“During the quarter, more than 7.6 million iPhones were activated, the majority of which were iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago.”

If I understand your intention, I still disagree with you: Apple has moved up market as much as it has moved down market. So just saying one rather than both is not useful to me when discussing their entire market share in aggregate.

They were already at the top of the market (unless you count the diamond studded iPhones). How could they possibly move “up-market”?

Run a business; the literature on “moving down market” is extensive, using the phrase implies, to me, a business strategy which fundamentally has different goals, execution, and financials than what Apple is doing.

If I had said that Apple was solely going downmarket, sure. But I have been arguing that they are reaching for lower income consumers without trying to give up the high income ones.

If you want to simply discuss the impacts of providing a low cost offering, rather than the business strategy and fundamentals, and to the exclusion to the impacts of moving up market and finding a sweet spot, that’s also fine. But, as far as I understand what you are saying, you aren’t doing so — you are ignoring the move up market as well.

So what was in the market “above” Apple? You’re still confused — upmarket and downmarket are about which consumers you attract, not how much money you manage to extract from them at the end of the day. For example, no one would claim that a used car dealership that offered 35% APR on 10 year old cars was upmarket, but some of those manage to extract more money per customer (and much higher margins) than some new car dealerships.

“I’ve been hearing for years now that Apple is actually designed for everyman (including, one presumes, low income consumers) and Android is for geeks.”

I do not gain anything insightful from this.

Possibly because you didn’t read the dictionary definition. Apple’s products at a lower price point meet both prongs of the definition of downmarket — appealing to and designed for lower income consumers.

In your world view, are geeks inherently wealthier than the everyman? Is geekdom and everymannery mutually exclusive? Are middle-class and lower-class people incapable of perceiving the value of a higher cost item and choosing to make that purchasing decision?

There are two somewhat orthogonal metrics there — “designed for” and “appealing to” (in the sense of motivating a purchase). According to some, Android phones are too difficult to use for everyman, but Apple phones are not. Both phones are now available at extremely appealing price points.

I think polite discussion doesn’t require insults.

But we’ve often had impolite discussions. And you often manage to stick the needle in first, saying things like “twisting,” “hypocrite” and “liar”. Why would you expect me to be polite if you’re not? You probably have some mental model of how far you can go before it’s impolite, and think you haven’t exceeded it but I have. Guess what? Not everybody will be calibrated to your own image.

I do not see any reason to respond to what I write with “WANKER” or “since you work for Apple.”

Where I come from, either of those is more polite than “liar” or even “hypocrite” (which, btw, you called me before I called you “wanker”) but, of course, YMMV.

I think my writing has been in line with such expectations of a polite discussion.

Obviously our mileage varies on this opinion as well.

Feel free to explain how these responses are accurate, helpful, information, condusive to discoure, intelligent, showing maturity, simply polite, or not “provoked.” Maybe we can politely discuss that.

I’m not going to go back to all the history of all the comments you have made on all the posts, but when I see a description of what I wrote as “twisting” or of me as “hypocritical” then I figure I’m not in a polite conversation, and, despite my mother’s best advice, feel no compelling urges to respond politely, especially if I notice your name on the post and remember that you’re not new here and have a history of provocation.

Yeah, there you go…

Just telling you like it is. Feel free to act on or ignore this information as you see fit.

Patrick Maupin, I guess so, together with a fear of not having the “in” thing. But I can’t help thinking that those margins can’t continue very long. And that Microsoft is paying so much money to get the “full girlfriend experience” from its business “partners” continues to astonish me.

“But I have been arguing that they are reaching for lower income consumers without trying to give up the high income ones.”

And I’m not talking about “giving up” the high income ones; I’m talking about complete ownage of the premium market and still finding new room to move up market and down market so that the aggregate financials remain unchanged.

“So what was in the market “above” Apple?”

Why does there have to be someone above them?

“Apple? You’re still confused — upmarket and downmarket are about which consumers you attract, not how much money you manage to extract from them at the end of the day. For example, no one would claim that a used car dealership that offered 35% APR on 10 year old cars was upmarket, but some of those manage to extract more money per customer (and much higher margins) than some new car dealerships.”

I don’t know what you think I’m confused about.

“Apple’s products at a lower price point meet both prongs of the definition of downmarket — appealing to and designed for lower income consumers.”

And Apple hasn’t, in aggregate, moved down market — they’ve moved up. For x number of consumers making y dollars they’ve compensated at the high end with a number of consumers making y+b dollars, yielding exactly the same totals.

Does this averaging occur smoothly across all categories (from paid apps per user to time spent consuming streaming video to whatever) no. But there is equally no strong evidence for declines across the user base when growth is occuring at all levels: bottom, middle, and top.

“Where I come from, either of those is more polite than “liar” or even “hypocrite”” Yes, it is I who am out of touch with reality.

And, btw, I can only find hypocrite and hypocritical in YOUR post. Maybe Google Chrome’s Find feature is broken or something. Oh, you mean this:

“Ah, yes, the same hypocrisy: non-participation is an option when it’s “offered” by Google; a jail when offered by Apple.”

I’m sorry for calling a statement, not anyone person or you in particular, which is clearly not consistent (non-participation is a valid choice as a sole alternative in one case and not the other). I apologize if this statement provoked you. I beg foregiveness if that offends more than name-calling.

Do you think Sprint recently and T-Mobile now are all lying? Ignorant? Complete fools? Really curious about that.

There is no question that if you don’t have the iPhone, you will have to do other things to entice at least some of the customers. IIRC, T-Mobile suffered a lot more churn than Sprint or Verizon when AT&T had the iPhone exclusive — they’ve been losing customers for awhile. This indicates to me that they have other problems in addition to not having the iPhone, but now that everybody else has that, it’s become the most convenient excuse.

I know of about 6 or 7 people who had difficulty after breaking or soaking their phones but never for defective units.

This. Perhaps I should have said “were killed” rather than “died.”

Are you referencing this one sentence?

“During the quarter, more than 7.6 million iPhones were activated, the majority of which were iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago.”

That’s a symptom, not the disease. Perhaps I’m stupid, but I can’t see how anybody could discern what proportion of AT&T’s 9.4 million smartphones sold during the quarter were actually iPhones, despite the entire world outside of AT&T claiming that it was 80%. (Larry Yelnick might think that AT&T’s refusal to correct the world means that the world is correct, else AT&T would feel the wrath of Sarbox, but I don’t think it’s that simple.)

Anyway, if you can find definitive statements and numbers at AT&T’s site that actually show their iPhone sales figures, that would be interesting.

To me, the phrase “7.6 million iPhone activations” taken at face value would mean all the iPhones that AT&T sold, that were resold in the after market and activated on a new account, and that were sold by Apple and activated on AT&T’s network.

And Apple hasn’t, in aggregate, moved down market — they’ve moved up. For x number of consumers making y dollars they’ve compensated at the high end with a number of consumers making y+b dollars, yielding exactly the same totals.

You still refuse to acknowledge that Apple’s ASP only bears an increasingly tenuous relationship to what the consumer pays?

I’m sorry for calling a statement, not anyone person or you in particular, which is clearly not consistent (non-participation is a valid choice as a sole alternative in one case and not the other). I apologize if this statement provoked you. I beg foregiveness if that offends more than name-calling.

Ah, yes, the old “I wasn’t addressing you, I was addressing what you said” complete with the Uriah Heep emulation. Very good, but FWIW I never said that non-participation is not a choice with Apple. It certainly is a choice, one that I heartily recommend on a daily basis. It’s a bit difficult to recommend to people who already own the iPhone, however. OTOH, you are free to go use bing and hotmail.

“There is no question that if you don’t have the iPhone, you will have to do other things to entice at least some of the customers. IIRC, T-Mobile suffered a lot more churn than Sprint or Verizon when AT&T had the iPhone exclusive — they’ve been losing customers for awhile. This indicates to me that they have other problems in addition to not having the iPhone, but now that everybody else has that, it’s become the most convenient excuse.”

I’m having trouble following: is it a reality or is it an excuse? It seemed like you started saying one thing and ended saying something else.

“Perhaps I’m stupid, but I can’t see how anybody could discern what proportion of AT&T’s 9.4 million smartphones sold during the quarter were actually iPhones, despite the entire world outside of AT&T claiming that it was 80%.”

I think others are looking at the available data and other data sets and teasing out reasonable estimates.

“To me, the phrase “7.6 million iPhone activations” taken at face value would mean all the iPhones that AT&T sold, that were resold in the after market and activated on a new account, and that were sold by Apple and activated on AT&T’s network.”

And?

“You still refuse to acknowledge that Apple’s ASP only bears an increasingly tenuous relationship to what the consumer pays?”

I don’t follow: it doesn’t seem tenuous at all. $0-399 carrier subsidized; $375-$849 unsubsidized. You can even see a rather clear and regular stepping function up through the full mix of subsidized and unsubsidized phones (except for the unsubsidized 3GS up to the subsidized starter 4S) all the way up to $849. The most common price paid by the consumer is likely in the $3-400 range and the unsubsidized range is likely $6-700, which happens to be the rough ASP for all models.

I really don’t follow this at all: Are you asking me if Apple gets a higher subsidy than its competition, and do consumers and carriers actually value iOS as that much more valuable than the competition? Yes and yes. I don’t find that mysterious or tenuous or however else you’d like to describe it. It seems quite logical. Just as it seems quite logical that a SGS2 would have a higher than average subsidy but still less than the iPhone. Markets move towards the prices they will bear.

Notice that the Nokia N9 is mentioned first. Now, to give you some wider context on why we theorize about such a possibility: after spending billions on development Nokia suddenly announced it’s marginalizing its MeeGo effort and will release one last handset. This was the N9 which went on sale last summer. Back then, some nay-sayers doubted the future of the Nokia Windows Phone and asked Elop what would happen if the N9 sold better than Windows Phone. Elop then gave a very controversial answer, especially considering his position as CEO of Nokia by saying that even in that case, the company would not promote sales of its MeeGo smartphone.

On the other side, there was Windows Phone, which the company is promoting extremely vividly by spending millions, plus getting platform support of $250 million from Microsoft. It’s only logical to assume that Nokia wants to paint the best picture possible for its Windows Phone figures. Proving that is the fact that Nokia made an exception for Windows Phone shipments. Nokia reported “well over 1 million” shipped handsets, but unlike all of the report which focused around Q4 2011, this figure is for a wider period, “up to date.” We should also note that the figure does not represent actual sales to customers, but units shipped to retailers, which are yet to be sold.

Again we must ask whether the 1 million phones were actually sold to end-users io stuffed into the channel. In contrast tot he 1 million CyanogenMOD users, who are actual users.

> Again we must ask whether the 1 million phones were actually sold to end-users io stuffed into the channel.

I would guess 1 million is the number of phones in the channel. It’s still very early days. E.g. here in Finland, the retailers have taken presale orders for Lumia for a while, but they won’t actually be available until the first of February. Also, direct comparison to N9 is difficult, because the products have been available in different markets. That’s no accident, of course. Elop et al. deliberately didn’t make N9 available in a lot of places.

I remember that in the late nineties, people were predicting the dot-com crash. Some fund managers were fired as they got out of the bubble too early. They “lost” so much money by not riding the bubble a few months more. These fund managers were right, just not about the exact date of the crash.

Criticizing Eric because he fails to pin-point specific date for when consumers will ditch the iPhone is like criticizing those fund managers for failing to get the correct date of the March 2000 dot-com crash.

In other news, with all the hype about Apple’s good 11Q4 numbers, we might forget the bigger picture :-)

Having used both systems, I have to say that I vastly prefer iOS to Android. Android UI is just horrible. I haven’t used CyanogenMOD though, so I can’t comment on that. My previous phone was an iphone, my current phone is an android, and more than likely my next phone will be an iphone.

I notice from the Cyanogen Mod stats that the country with – by far – the highest uptake (per capita) is Israel. More than double the US rate. Does anybody have a theory to explain this? Is there something going on with Israeli carriers that we don’t know about?

AT&T reported 9.4 million handsets sold. But they reported 7.6 million iPhones *activated*. What @Patrick Maupin is pointing out is that if a person bought a phone at an Apple store and activates it on AT&T’s network, it’s an activation for AT&T (i.e. shows up in their 7.6 million number) but not a handset sale for AT&T (i.e. *doesn’t* show up in the 9.4 million number).

So the percentage of iPhones sold by AT&T last quarter *can’t*be 7.6/9.4 unless every iPhone activated by AT&T was also *sold* by AT&T, which simply isn’t going to be the case, especially given the activity of the Apple stores. (@Patrick Maupin and others point to the regifting scenario, too, but that’s a much smaller contributing factor overall, surely – those storefronts do a *lot* of business, especially in major metro markets.)

The percentage of iPhones sold by AT&T, then, is 7.6 – x / 9.4, where x is activations of phones not sold by AT&T directly. Verizon has the same situation. Sprint probabl y less so, because I think Sprint activations are more likely to come from Sprint sales, but fundamentally they have the same issue. No-one outside of AT&T / Verizon / Sprint knows what x is, so @esr and @Patrick Maupin and others are right to say “we need to wait to see what the overall picture looks like”.

Personally, I think x is going to have to be a really big number for all three carriers to prevent iPhones from outselling Android handsets this quarter, but it’s certainly conceivable that x *is* a big number, and Android handsets have outsold iPhones again this quarter, in iPhone’s biggest-ever quarter. It’s an entirely defensible argument and position, whether I happen to agree with it or not.

And it the end, it’s not *that* significant, because I think this is *clearly* Apple’s biggest-ever quarter, and I think the growth they’re seeing this quarter is unsustainable, so regardless of whether or not the bump puts iPhone sales over Android sales *this* quarter, that can’t continue as a sustainable pattern.

But I still think the numbers are significant, because they go against the “network effects” trend – there’s something here that says “approaching 50% marketshare hasn’t caused an avalanche for Android”. The question is: What is still working in Apple’s favor, and what does that mean long-term? I don’t think it’s a good idea to dismiss these figures out of hand – they’re still significant, in my view, but it’s also not a good idea to read too much into them.

comScore will give us another *type* of data point (not just another data point), that could give more insight into what’s going on overall. What *isn’t* going on is “landslide in favor of Android”, at least not yet, but we need more information before any more inferences can effectively be made about such a landslide…

I have a theory about why there was such a big surge in iPhone sales last quarter.

The iPad was originally rolled out to the public between April and May of 2010.

It, and its successor, have been hugely successful, selling well over 50 million units. People love it when they get their hands on it.

The iPhone 4 was released only a month or two after the original iPad, in June of 2010.

Between that time and the release of the 4S last quarter there were no new iPhones.

For the vast majority of people who bought an iPad there have been no new iPhones released since their purchase. Until the 4S.

I believe that we are seeing a halo effect from the iPad, but that people were waiting for the next model, which usually would have been released last summer.

This led to huge pent-up demand, which has resulted in a huge quarter for Apple.

So, I think we can expect the peak from last quarter to settle a bit in subsequent quarters. Apple won’t be sailing quite as high in the near future. However, their level will settle back to a point higher than it was before, relative to Android. iPad will continue to produce a halo effect for Apple, but just not in quite such a spectacular and explosive fashion as we saw for Q42011.

What nato said. I don’t think 80% is a “reasonable” estimate. If you want to play the game, go look at AT&T’s report, and tell me what the number is and exactly how you got there.

Plus the “upmarket”/”downmarket” argument is tedious and detracts from my point which is that Apple reaches a lot more price-sensitive consumers (what I would call “downmarket”) than they would if the carriers only gave iPhones the same subsidy as Android phones.

Plus the argument about T-Mobile is really pretty simple. Yes, not having iPhone is a problem for them, but no, it’s probably not their biggest problem, and to contrast with T-Mobile’s trouble, when Verizon and Sprint didn’t have the iPhone, it didn’t seem to cause them as much churn as T-Mobile is claiming from the iPhone problem.

Finally:

> Markets move towards the prices they will bear.

This I agree with, but it sometimes takes time. I think the iPhone subsidy and Android subsidy will start to move together, almost certainly some time this year.

There is no doubt that the iPad helps drive sales of the iPhone, and I think you are absolutely correct that people will often wait until the next model, if they think it is coming soon.

But that’s not the only factor driving large iPhone 4S sales by any means.

While I’m sure there were a lot of people who didn’t have iPhones waiting for the iPhone 4s, did you see the articles I referenced? I found estimates ranging from 64 to 73% for the number of iPhone 4S handsets that were sold to people who already own iPhones. Those people were already in the Apple ecosystem. They might own an iPad, but didn’t need one to convince them to get the 4S.

And, as I’ve pointed out before, when Verizon launched the iPhone 4, there were a lot of customers who apparently didn’t want last year’s model iPhone (immediate uptake was a lot smaller than a lot of analysts predicted). I’m sure a lot of those who delayed went out and bought the 4S, independent of any iPad effects.

Actually, I’ve just realized that I’m making a pretty big assumption there – it’s *possible* that an iPhone purchased at an Apple store on an AT&T plan still forces AT&T to pay the subsidized fee for that iPhone and therefore still shows up as a handset sale for AT&T. I can see Apple pulling a move like that.

That would make the x number from my example above much smaller, though.

Does anyone have any concrete information about how those sales are accounted?

> it’s *possible* that an iPhone purchased at an Apple store on an AT&T plan still forces AT&T to pay the subsidized fee for that iPhone and therefore still shows up as a handset sale for AT&T.

It’s almost certain that that handset costs AT&T the subsidy (unless the consumer buys it for upwards of $500). It’s even probable that the handset costs AT&T the same sort of additional money they would pay walmart or target for activating a new account on their network. The only question is whether it counts as a sale on AT&T’s ledger.

AT&T (IMO) deliberately doesn’t give us enough to figure this out. They report stellar smartphone activations (up 60% YOY), but a year ago, they reported “integrated devices” which I’ve never seen defined as smartphones, and even then didn’t give total activations.

So we know they had a bang-up quarter for both Apple and smartphones in general, in both sales and activations, and we know the total number they sold, and the number of Apple phones they activated, but we don’t know the number of Apple phones they sold or the number of non-Apple phones they activated.

They’re walking an interesting tightrope of trying to inform investors, trying not to panic investors, and trying not to inform their competition.

whatvever the difference is between “activations” and “new iphones” on AT&T, seems it probably wouldn’t change the facts too much. Does anyone have the transcript/PR where they talked about the iPhone/Smartphone numbers? Might be interesting to see the exact language they used.

I’m going to guess 10% might be “old” iPhones activated? There isn’t any real data on this, so I think we are stuck with guessing.

This problem doesn’t apply to Verizon/Sprint at all, agreed?

I think Comscore over next couple months will validate these numbers. The real question is: does the iPhone gain hold? Or was it a holiday thing + the long wait for the 4S held off buyers? My guess is that the iPhone gains might back off a bit, but iPhones will hold steady above the 30% share for this year.

And let’s be honest – all anyone is doing here is looking at the numbers and making educated guesses based on trends and gut instincts on how people behave.

Obviously Apple is going to lose market share on tablets if the Kindle Fire is selling well (and why wouldn’t it be?). 39% seems surprisingly high but not unbelievably so, given the price differential.

But all this just erodes the argument that ‘tablet market share’ matters. It’s hard to believe that $500 ipads are competing for the same customers as $200 kindles. My assumption is that right now (and for the foreseeable), Apple will completely own the former segment and Amazon will completely own the latter. And that there will be almost zero aggregation/network effects between the two categories, since both devices are basically used for media consumption and games rather than work.

It’s much closer, in many ways, to Nintendo DS versus PSP than PC vs. Mac.

And it the end, it’s not *that* significant, because I think this is *clearly* Apple’s biggest-ever quarter, and I think the growth they’re seeing this quarter is unsustainable, so regardless of whether or not the bump puts iPhone sales over Android sales *this* quarter, that can’t continue as a sustainable pattern.

I would say the biggest quibble with the study is including the Nook and Fire as Android when they only have the potential of being Android if the end user roots and installs a custom ROM. (Particularly when SA says they are excluding “Readers” but then include the 2 most significant AOSP-based “Readers.”)

@Patrick Maupin
“Do you have evidence that (especially the AT&T numbers) completely reflect Apple sales? That no used iPhones were sold by the carriers that didn’t go through Apple? We saw exactly this pattern a few months after the release of the iPhone 4 at AT&T. Undoubtedly they’ve gotten faster at turning around used phones.”

I’ve never seen anyone else other than you even mention “used iPhones” in discussions about sales/marketshare. I think most people assume it’s not significant. Do you have any evidence it is significant? AT&T did specify that more than half of the activations were “4S”. So let’s say 50% were not 4S. What percentage do you think were used? I just took a guess in my above comment of 10%, which means 20% of the “not 4S” count. That seem reasonable?

I fully understand and agree with nato. I’ve never estimated what the percentage is. But I do think it’s only reasonable to accept that iPhone likely outsold all Android devices on both major US carriers. And I do not see the need for handwringing. I don’t see an attempt to put forth some narrative you don’t like: I see the typical earning announcement attempt to comply with their fiduciary responsibility to accurately portray their financial situation while not revealing specific strategic details that could inform competition.

“Plus the “upmarket”/”downmarket” argument is tedious and detracts from my point which is that Apple reaches a lot more price-sensitive consumers (what I would call “downmarket”) than they would if the carriers only gave iPhones the same subsidy as Android phones.”

As far as I can tell, and again, apologies in advance for misinterpreting if I have, but: you think it’s unfair that the market has determined the iPhone is the best phone, worthy of the highest subsidy. Otherwise, I don’t see the point. Yes, Apple can sell to everyone in the market by virtue of having the most desirable phone and highest subsidy. And?

“I think the iPhone subsidy and Android subsidy will start to move together, almost certainly some time this year.”

This has come up time and time again here. Unless you assume that all those shipments languish on the shelf, then head back to the manufacturer, who promptly buries them in the land fill, and then ships out an even higher number ofnew units, the fact that Android shipments are (dramatically) increasing quarter after quarter means that shipped approximates sold, with some unknown time lag. I assume the time lag is generally not unreasonable, because in this day and age of computerized inventory controls, everybody knows exactly how much stuff they’re holding and how much it costs them.

So shipped vs. sold is not at all the same as activated vs. sold. Most units shipped by a vendor will eventually be sold (see, e.g. HP TouchPad). Presumable all units activated by AT&T were sold (some even more than once). The question is, who sold them?

> whatvever the difference is between “activations” and “new iphones” on AT&T, seems it probably wouldn’t change the facts too much.

Really? A priori, I would assume that Apple sold more AT&T phones directly than AT&T did. If those phones were included in AT&T’s activation numbers but not their sales numbers, that could be huge.

> I’m going to guess 10% might be “old” iPhones activated?

That’s approximately what the study I pointed to suggested.

> This problem doesn’t apply to Verizon/Sprint at all, agreed?

I don’t know. I couldn’t find the numbers in Verizon’s quarterlies. They all seem to come from talks by Fran Shammo. A lot of people excitedly report this as “sold” and some report as “activated.” Bearing in mind that Verizon competes with AT&T, if AT&T fudges the numbers by confusing activated with sold, I would certainly expect Verizon to follow suit. I haven’t even tried to look up Sprint info yet.

@Larry Yelnick:
“Given that ‘You can make good predictions with a much smaller sample’, why does Comscore go to the expense of scientifically interviewing 30,000 people every month?”

Larger samples let you subdivide your reporting. If you have enough sample to report on total sales, double it and now you can report on sales to men vs. sales to women. Increase it further and you can report on sales to, say, Hispanic women. With a sufficiently large sample, you can look at “Hispanic women who have children under 18 in the home and who live in Pennsylvania.”

We don’t see this with Comscore because that level of reporting is only available to people who purchase the study. And yes, N=30,000 people is undoubtedly a very expensive study to execute, so they are undoubtedly looking at very fine-grained results.

If you want to look at sales to small niche groups, you need either a very large sample size or what’s called an “augment”. That is, if you want to know attitudes or behaviors of a group that makes up only 10% of the population, you could multiple your sample size by 10 (very expensive), or you can run the base sample and *also* do a separate sample that includes *only* the targeted low-incidence group. Then you read the behavior of the low-incidence group from a combination of the augment sample and the sub-set of the base sample that belongs to that group. Of course, you can’t just lump the base and augment results together to get totals; you have to either ignore the augment, or weight the results of the augment with the base to reflect the size of that group.

> I fully understand and agree with nato. I’ve never estimated what the percentage is.

You said lots of people did and they obviously were reasonable. The only estimate I’ve seen is 80%.

> But I do think it’s only reasonable to accept that iPhone likely outsold all Android devices on both major US carriers.

That’s certainly a probability on AT&T (home of most Apple fanatics) and a distinct possibility on Verizon.

> And I do not see the need for handwringing.

Any “handwringing” is over the fact that different numbers are unthinkingly conflated and propagated in a way that is meaningless and misleading.

> I don’t see an attempt to put forth some narrative you don’t like:

Did I say there was?

> I see the typical earning announcement attempt to comply with their fiduciary responsibility to accurately portray their financial situation while not revealing specific strategic details that could inform competition.

I’m sure I already said that.

> you think it’s unfair that the market has determined the iPhone is the best phone, worthy of the highest subsidy.

Fairness has nothing to with it, and by “market” I assume you mean the carriers and the stock market. I think it’s a stupid mutual-assured-destruction kind of decision that distorts things enough to make it harder to see true consumer preferences, but there’s nothing inherently unfair about it.

I also find your wording interesting. If the iPhone were the “best phone” by consumer metrics, then it would require a smaller subsidy, not a larger one. So it’s apparently the “best phone” by carrier metrics, but again, I have yet to see any data that current iPhone customers provide a higher ARPU to the carriers. (note that it would have to be over $10/month higher to justify a $400 subsidy vs. a $150 subsidy).

> Yes, Apple can sell to everyone in the market by virtue of having the most desirable phone and highest subsidy. And?

Again, the high subsidy indicates that the primary desirability of the iPhone is in the carriers’ eyes. They want people on iPhones so badly they are willing to reduce the consumer’s cost to put them on price parity with Android phones. The question is why?

> And I disagree [that iPhone subsidy and Android subsidy will become closer].

Maybe they won’t. Maybe all the iPhone users cluster at the top of the tiered data plans, and it’s because of some subliminal message that keeps popping up on Apple phones to use more carrier data bandwidth. That would be a survey result I’d love to see from comscore or Nielsen — what kind of phone vs. average phone bill.

You can’t call the immense difference between “shipped” and “sold,” bleating. That’s disingenuous especially in light of the interminable bleating you’ve been doing with “activations” versus “marketshare.”

But lets play this game, that shipped equals sold. Fine.

If Android tablets are 39% of the sold tablets, I’ll eat a shoe. Even if you lump the Kindle Fire (5m roughly last quarter) in to that category, that leave 5.5 million “Android” tablets “sold.” So for every 3 iPads you see in the wild, you should see at least one Android based tablet. Good luck with that. Not sitting on a shelf at Office Depot collecting dust, in the hands of a consumer. That’s not happening, at least in the US, and to deny that is just fanboism at its worst.

I think there are several plausible explanations for “shipped” not resulting in “sold”, including units going back to manufacturer being counted as “shipped” a second time when they go out, new units shipped to establishments that don’t (yet) have stock just sitting on shelves, etc.

It’s interesting that you bring up the HP TouchPad, whose sales were so bad that Best Buy wanted to return 80% (or more) of their stock. You’re right that they did sell eventually – in a fire sale – but is it really accurate to count the shipped ones as sold? That doesn’t follow.

And we’ve got plenty of reporting about shipped units being nowhere close to sold units. Here’s a quick exercise: look up the shipment numbers for the Xoom. Do the shipment numbers fall off because nobody’s buying the Xoom? Because Samsung can’t find any more retailers who want to take additional stock? Because the product is so successful that everyone who wants one bought one? How much residual shipped inventory is left? Zero?

And to be clear, I’m not suggesting that activated vs. sold is different in the same way that shipped vs. sold is – I’m simply pointing out that activated != sold *AND* shipped != sold.

We can argue ad infinitum about whether activated is closer to sold or shipped is closer to sold, or if shipped means “eventually sold” vs. activated meaning “sold at least once, but maybe more”. We’re never going to get final answers on that, because the data we need (including returns) isn’t available.

All I’m saying is that just as we can’t use “activated” in the place of “sold”, or “sold” in the place of “activated”, we also can’t use “shipped” and “sold” interchangeably. Apples and oranges are both fruit, but they’re not the same thing…

@Patrick Maupin:
“The high subsidy indicates that the primary desirability of the iPhone is in the carriers’ eyes.”

This is such an important point that it needs to be highlighted.

“They want people on iPhones so badly they are willing to reduce the consumer’s cost to put them on price parity with Android phones. The question is why?”

I wish I thoroughly understood the business model of the carriers. It has never made any sense to me. (See esr’s earlier comments about negative network ROI; this issue is bigger than iOS vs. Android.)

Address what I wrote if you want, and explain why it’s wrong. Address the fact that Strategy Analytics attempts to compensate, if you want, and how they can’t.

> So for every 3 iPads you see in the wild, you should see at least one Android based tablet.

Umm, no. 39% was for last quarter, and it’s been on a steep ramp with not that many before. Cumulatively, there have been 55 million iPads shipped, so the number would be more like 1 out of every 8 or 9.

> That’s not happening, at least in the US, and to deny that is just fanboism at its worst.

And these statistics are global, not domestic US. Again, if you have a real argument with numbers about how and why bestbuy and walmart and target and officemax and fry’s and all their foreign equivalents are stockpiling Android tablets and keep ordering more, even though they’re not selling the ones they got last quarter, I’d love to hear it — either how stupid they are or some grand conspiracy against Apple, or whatever.

On a separate note, it’s not entirely clear to me whether or not Kindle Fire and similar tablets are included in the “Android” category – Amazon is named, so it would seem that they are, but it would be very interesting to find out.

Because even Google doesn’t consider the Fire to be an Android tablet…

Of *course* the vendors use the terms interchangeably – when Samsung ships Galaxy Tabs to Best Buy, it’s not for free. Best Buy *pays* for them, so it’s a sale from Samsung’s perspective.

But it’s not a fair representation of *consumer* marketshare, as Strategy Analytics themselves admit. If shipped was the same as sold, they wouldn’t have to do “channel checks”.

And my whole point is that best buy is not buying them for their health. Yes there are outliers like the Xoom and the TouchPad, but when bestbuy keeps buying Android tablets, I have to believe they’re selling them. Again, there might be a lag, but it’s probably not that much.

“note that it would have to be over $10/month higher to justify a $400 subsidy vs. a $150 subsidy.”

Yup, and I forget which of the carriers, but one was just explaining how a high number of existing subscribers were willing to terminate their contract and re-enroll for a new contract. Increased ARPU and decreased churn. Reducing churn is also highly valuable to carriers in addition to higher ARPUs.

“If the iPhone were the “best phone” by consumer metrics, then it would require a smaller subsidy, not a larger one.”

I don’t follow the logic. The subsidies aren’t based on needing to sell, least desirable. They’re based on which have the most value to both the carriers and the consumers buying the phone. If they were based on “least desirable” to the end user, you’d see some amazing deals on some amazing crappy phones.

“The question is why?”

I keep seeing you answer this question yourself, but then you seem to refuse to believe it just because the carriers aren’t going to provide individual ARPU’s for every handset they offer.

I think there’s a reasonable alternative explanation – Best Buy isn’t buying more of the same tablets, it’s buying new models. This is actually pretty consistent with my understanding of Best Buy’s model – they get in a shipment of stuff, and then the order a shipment of the *new* stuff, not another shipment of the same old stuff. Keeping a constantly varied inventory is kinda key to their business model.

So the Galaxy Tab comes out, they buy a bunch and sell x% of those units, then the Xoom comes out, they buy a bunch and sell 10% of those, bitch at Motorola, then the Galaxy Tab 10.1 comes out, they buy a bunch of those and sell x%, etc.

More shipments isn’t an indication that previous demand was satisfied unless you’re counting shipments of the same device to the same retailer. And when you look at shipments of the same device, as with Motorola, those numbers seem to be declining over time, indicating, if anything, that those devices *aren’t* selling as fast as they ship.

Samsung refuses to release shipment numbers anymore, which is a shame, because I believe that they’re in the best position to grow sales of the Galaxy Tab 10.1 over time. But the raw proliferation of Android tablets certainly allows for a high degree of channel stuffing to occur without any individual device having to sell very well.

” but when bestbuy keeps buying Android tablets, I have to believe they’re selling them. ”

Best Buy keeps buying PCs also, yet PC sales are dropping dramatically. Just because a vendor stocks an item, does not mean it’s being sold. The Touchpad was stocked by BestBuy, but didn’t sell until HP gave credits to their vendors so that the price could be dropped to the firesale price.

And shipments could include wholesalers who don’t even show up. The fact that Analytics has to even perform “channel checks” to TRY and validate the data is a huge red flag. The fact that these vendors are using the term shipped instead of sold is also a huge red flag. If they were selling so well, they’d be saying that. But because of SOX compliance, they can’t. Yet you ignore that because it doesn’t fit with your model of how Android should be surpassing iOS.

Put the shoe on the other foot. How would you react if Apple suddenly started reporting “iPads manufactured” instead of sold? A bit suspicious, no?

@Patrick Maupin “Really? A priori, I would assume that Apple sold more AT&T phones directly than AT&T did. If those phones were included in AT&T’s activation numbers but not their sales numbers, that could be huge.”

“On a separate note, it’s not entirely clear to me whether or not Kindle Fire and similar tablets are included in the “Android” category – Amazon is named, so it would seem that they are, but it would be very interesting to find out.”

Yes it has been confirmed. And SA has even clarified with more granularity: the two non-Android readers represent 40% of the current Android tablet market share.

I don’t know. I couldn’t find the numbers in Verizon’s quarterlies. They all seem to come from talks by Fran Shammo. A lot of people excitedly report this as “sold” and some report as “activated.” Bearing in mind that Verizon competes with AT&T, if AT&T fudges the numbers by confusing activated with sold, I would certainly expect Verizon to follow suit. I haven’t even tried to look up Sprint info yet.”

Sprint has to be 100% new as you can’t take any existing verizon/ATT iPhones and use them on Sprint.

Verizon has to be close to 100% new. There are some used iPhone 4s out there, but everyone who bought them would still be on contract.

And I’m a bit skeptical in trusting ANY figures from firms like SA. Look at their home page, and the appropriately titled “WHO WE SERVE” link. They have every incentive to minimize data that could be detrimental to their subscribers.

Maybe they end up in a clearance bin 4 months later. Maybe they are sold at a steep discount to downstream resellers to clear their inventory, shifting them into someone else’s inventory. I certainly have never gotten the feeling whenever I walked into Best Buy that they are necessarily turning over all of their inventory at a rapid pace.

I don’t know if we have much transparency into Best Buy’s inventory channel, I think it’s safe to presume that they certainly aren’t breaking down their channel with respect to individual products running Android.

“So we’re talking about roughly 77/23 iPad/Android mix at its most favorable according to SA, I believe.”

I should clarify: most favorable in the sense that shipments vs sales certainly ways in Apple’s favor. However, it could be an even more favorable mix based on custom ROM installation — but I personally don’t rate that possibility as significant.

So Amazon, which is notoriously tight-lipped about Kindle sales figures other than “Best year ever!” type announcements, is sharing sales figures with SA that they wouldn’t put out in there own press release. Color me even more skeptical.

@Patrick Maupin is making the point that if AT&T sold 100 phones and Apple sold 100 phones that were activated on AT&T network, AT&T might report 200 phones activated when only 100 were sold. Which is possible, and the stats could be *really* skewed by Apple store and store.apple.com preorders if that’s the case.

However, I’d be surprised if AT&T paid the surcharge to Apple for those phones but didn’t report them as sales, so there’s a plausible scenario that Apple in-store sales get counted by AT&T as sales, if AT&T ends up paying Apple for those in the end…

@nato
“@Patrick Maupin is making the point that if AT&T sold 100 phones and Apple sold 100 phones that were activated on AT&T network, AT&T might report 200 phones activated when only 100 were sold. Which is possible, and the stats could be *really* skewed by Apple store and store.apple.com preorders if that’s the case.”

If AT&T stores sold 100 iPhones and Apple stores sold 100 AT&T iPhones, this means 200 activated on AT&T. This would be correct. I don’t follow how your scenario results in only 100 sold?

Sorry, I wasn’t clear. In the scenario I gave, AT&T might only be allowed to report their own sales of 100 phones, but be allowed to report 200 activations.

In that scenario, if AT&T sold 100 iPhones and 100 Android phones and Apple sold 100 iPhones, it could be that AT&T might report 200 iPhone activations and 100 Android phone sales, suggesting that 66% of their sales were iPhone, when in fact they only sold 100 iPhones and 505 of their sales were iPhone.

What’s not clear right now is if AT&T reports a sale for iPhones sold by Apple and activated on AT&T’s network, as opposed to merely an activation.

“So Amazon, which is notoriously tight-lipped about Kindle sales figures other than “Best year ever!” type announcements, is sharing sales figures with SA that they wouldn’t put out in there own press release. Color me even more skeptical.”

No, they are estimating just as they are for other manufacturers, just as Comscore is. I haven’t reviewed their methodology extensively, but I believe it’s more based on channel and component checking rather than consumer surverys — but I could be wrong, as I said, I haven’t looked that closely into their methodology.

Sprint has to be 100% new as you can’t take any existing verizon/ATT iPhones and use them on Sprint.

Verizon has to be close to 100% new. There are some used iPhone 4s out there, but everyone who bought them would still be on contract.

To take what I was trying to say (and nato explained a bit better than I did) and make it a bit more concrete:

Verizon sold apparently sold 7.7 million smartphones during the quarter, and did *something* with 4.3 million iPhones during the quarter. I am not at all arguing whether or not there are 4.3 million shiny new iPhones on Verizon — I can easily believe that. My only question is — how many of those 4.3 million are counted in that 7.7 million? Verizon doesn’t even give the 4.3 million number in their financials (that I could find). Apparently that number comes from a talk given by Fran Shammo, and I have seen some accounts that he said “sold” and other accounts that he said “activated.” The way Chinese whispers work, I couldn’t begin to tell you which one of those was right.

Now, just for the sake of argument, assume that Apple themselves sold 2 million Verizon iPhones during the quarter straight to consumers, from Apple stores and the Apple website. In that scenario, only 2.3 million of those 4.2 million iPhones would have been sold by Verizon itself, and the percentage of new smartphones on Verizon’s network last quarter that were branded Apple would be at most 44% (4.2 million out of the 7.7 million phones sold by Verizon plus the 2 million sold by Apple), rather than the 55% number everybody spouts.

I don’t know whether Fran Shammo said “sold” or “activated”. I don’t know whether an iPhone sold by Apple counts in Verizon’s sales figures, or even how many Verizon iPhones Apple sold directly. But I have seen zero evidence that anybody else who is talking up the 55% number knows these things either, or has even thought about it hard enough to ask these questions.

Add them together, you get 11.9/17.1 were iPhones. 70% of smartphones sold via the two largest US careers were iPhones. 30% were Android/BB/WP7.”

So to answer this. Yes, I saw AT&T released numbers. No, they didn’t give me enough information to show that 81% of smartphones sold were iPhones. Same thing with Verizon.

Now, if you can find substantive carrier pronouncements to back up what you’re quoting here, I’d love to see them, but I haven’t so far. And just to clear up any misunderstandings, I’m not even saying those numbers are wrong, just that AFAIK the carriers haven’t released enough information to prove that they are right.

I’m with you in the sense that we don’t have enough concrete information about sales / activations to draw definitive conclusions. However, I don’t think that makes those numbers *entirely* meaningless – it just means that we have to be careful how we use them, and to not read into them things that aren’t there. At the end of the day, there are 7.6 million more iPhones on AT&T because of last quarter, and that means *something*. Those phones came from somewhere and are going to end up in market share numbers, and should affect comScore.

I feel the same way about “shipments” – there’s not enough information there to draw definitive conclusions, especially when it comes to market share percentages. In the end, a boatload of Android tablets went out the door, and that *means* something. It just doesn’t necessarily mean that those ended up in the consumers’ hands. Maybe they did, maybe they didn’t – we can’t tell just from the shipments number.

But the fact that they’re shipping in large volumes is still a meaningful statistic – at the very least, manufacturers think they can be profitable and retailers think there’s demand. That’s significant… but not definitive.

> At the end of the day, there are 7.6 million more iPhones on AT&T because of last quarter, and that means *something*.

Sure.

> I feel the same way about “shipments” – there’s not enough information there to draw definitive conclusions, especially when it comes to market share percentages.

The definitive conclusions we can draw from shipments are based on the slope of the shipments. Shipments wouldn’t be rising nearly so fast if sell-through was low.

> But the fact that they’re shipping in large volumes is still a meaningful statistic – at the very least, manufacturers think they can be profitable and retailers think there’s demand. That’s significant… but not definitive.

But you have to remember that Android tablets have been around for a few quarters now. This is not a statistic out of the blue. There appears to be a steady, if steep and accelerating, ramp.

>This is such an important point that it needs to be highlighted.
>“They want people on iPhones so badly they are willing to reduce the consumer’s cost to put them
>on price parity with Android phones. The question is why?”
>I wish I thoroughly understood the business model of the carriers. It has never made any sense
>to me. (See esr’s earlier comments about negative network ROI; this issue is bigger than
>iOS vs. Android.)

An off the cuff theory, how much are early contract renewals (and presumably the reduced churn associated with that) worth to a carrier? As Patrick points out, a large number of new iPhone sales go to current iPhone customers, and a portion of those sales are people who upgrade every year to the latest iPhone. Those customers are paying a penalty to be able to upgrade early and break contract (when I last worked at Apple, AT&T charged the customer $15 / line to upgrade and the phone was only something like $100-$200 off the non contract price rather than the $300-$400 off for a new 2 year contract. And many iPhone customers can afford such a penalty because of the high resale value of used iPhones.

I imagine (though I certainly don’t have any hard proof at the moment) that such scenarios do not commonly apply to their android handsets due to a combination of the frequency of handset upgrades (when the new hot android phone is every 3 months, my guess is people are more likely to only view the next new one as a small incremental upgrade and more likely to hold out longer), a lower aftermarket resale value due to the frequent updates and due to lack of carrier / vendor support, the more price sensitive people who are attracted to the low cost android phones are not likely to upgrade until their phone dies.

Admittedly anecdotal, but after Christmas, my brother and I went looking for non-iPad touchpads (he wanted an Asus) at stores like Best Buy, Walmart, and OfficeMax and all we found were Kindle Fire and Nook tablets and empty shelves where the others had been. When asked, the sales people said the others had sold out.

I’m not sure you can definitively draw the “shipments wouldn’t be rising nearly so fast if sell-through was low” conclusion from shipments alone without pulling in some additional data, as there are alternative explanations for high sell-in, but low sell-through.

For example, lots of different poor-selling tablets could produce high sell-in numbers but low sell-through numbers. Take the cancelled Dell Streak series – how many of those sold in but not through?

Also, I think it’s important to decide what’s meant by “Android” – if 40% of the tablets are Kindle Fires and Nooks (where I think “shipped” and “sold” would have the same meaning, since it’s manufacturer to consumer directly without a middle man), that doesn’t really make a strong case for a nice growth curve for general-purpose Android tablets. The Xooms and Streaks and Galaxy Tabs of the world could be selling *through* really poorly, but that’d be hidden by the strong sell-through of Fire and Nook.

Note that I’m just pointing out plausible alternative scenarios. Personally I think the Fire is probably selling well, the Nook not so well, the Galaxy Tab 10.1 probably has traction and… the rest of them are sucking it up when it comes to sales. Does that bode well for a general Android tablet market? I don’t think so, and I certainly don’t think the “shipped” number is the way to measure adoption there.

That’s clearly anecdotal, but still very interesting. What region of the country was this?

It’s interesting to me, personally, because I live in a major metro area, commute on public transportation multiple times per day, and travel by air often, and I *rarely* see a non-iPad tablet. I don’t usually bring that up, because it’s also anecdotal, but it makes me curious to investigate further…

This has come up time and time again here. Unless you assume that all those shipments languish on the shelf, then head back to the manufacturer, who promptly buries them in the land fill, and then ships out an even higher number of new units, the fact that Android shipments are (dramatically) increasing quarter after quarter means that shipped approximates sold, with some unknown time lag. I assume the time lag is generally not unreasonable, because in this day and age of computerized inventory controls, everybody knows exactly how much stuff they’re holding and how much it costs them.

Given that moto posted large losses attributed in part to Xoom I’d say there’s likely a fair number of tablets, if not sitting in a landfill, soon destined for the a fire sale…

And Moto’s “shipped” profile looks exactly as you describe: 250K shipped in Q1, 400K shipped in Q2, 100K shipped in Q3 and a slight 200K rebound in Q4. I doubt Moto sold 950K units.

I can believe that Kindles sold well. I can believe that Nooks sold okay. I see pallets of Galaxy tabs at Costco that doesn’t seem to be moving much. Given that HP touchpads outsold Galaxy tabs though most of 2011 there’s not a whole lot of sales for that either. Essentially the Honeycomb tablets simply didn’t sell in 2011.

The Fire and Nook combined made up 40% of Android tablet sales.

“We asked the author of the study, Peter King, to estimate what percentage of Android’s tablet share is comprised of the Kindle Fire and Nook Tablet, and he told us it’s about 40 percent of that 39 percent number.”

“If you back out the Fire and Nook Tablet from the latest numbers, King says the Android tablet market grew about 100 percent. That seems decent, but iPad sales grew 111 percent year over year. So even when you add together Samsung, Motorola, LG, ASUS, Acer, Toshiba, and everyone else who makes an Android tablet, they couldn’t surpass the iPad.”

To me they are real tablets after I root them…but not that many folks will do that…and 7″ tablets are pretty much stuck in the content consumption realm. Whereas I do some content creation on my iPad and would do even more on a Transformer (or if I bought a keyboard cover for the iPad).

So shipped vs. sold is not at all the same as activated vs. sold. Most units shipped by a vendor will eventually be sold (see, e.g. HP TouchPad). Presumable all units activated by AT&T were sold (some even more than once). The question is, who sold them?

Sold for a loss at firesale prices I guess counts for a sale but not one that folks want to build a business around. Given that 7″ tablets are now being sold for nearly no profit I see that Android tablet segment transitioning to be nothing but Kindles and maybe Nooks of B&N can stay in business. 10″ is the only viable space for full android tablets.

@Nigel:

> Is that you intentionally or unintentionally being a prick?

Was I addressing anybody here? Project much?

You don’t need to be specifically address someone here in particular to be prickishly dismissive of other people’s point of view. Frankly your sold vs activated view is no different than that of shipped vs sold. To be a prick I might point out that both are nitpicky but at least one has relevance. That the Playbook shipped in far larger numbers than sold is one reason why RIM is collapsing and likewise for the Xoom and Motorola. Not even Samsung is doing that well in the tablet department despite crushing on the smartphone front.

For example, lots of different poor-selling tablets could produce high sell-in numbers but low sell-through numbers. Take the cancelled Dell Streak series – how many of those sold in but not through?

Except that you would think that if that happened enough times, retailers would eventually sour completely on Android tablets, rather than doubling, tripling and quadrupling down.

Also, I think it’s important to decide what’s meant by “Android” – if 40% of the tablets are Kindle Fires and Nooks (where I think “shipped” and “sold” would have the same meaning, since it’s manufacturer to consumer directly without a middle man), that doesn’t really make a strong case for a nice growth curve for general-purpose Android tablets.

Actually, I’m not sure that shipped and sold are the same for Kindles and Nooks. For one thing, Strategy Analytics might be peeking in the channel from manufacturer to B&N. For another thing, you can buy the Nook lots of places (Fry’s, Best Buy, for example). But certainly a case can be made that the bulk of these are easier to track.

In terms of what “Android” means, I think even a Nook or a Kindle contributes to the Android ecosystem, albeit perhaps not as much as a general purpose device. But they contribute to the hardware ecosystem, the software ecosystem, and the branding ecosystem to some extent.

That’s certainly a probability on AT&T (home of most Apple fanatics) and a distinct possibility on Verizon.

Non-prickish phrasing:

“That’s certainly a probability on AT&T (home of most Apple fans) and a distinct possibility on Verizon.”

/shrug

I feel I’m being a prick by pointing these things out but you seemed to genuinely be wondering why. I could go on about freetards and fandoids but regardless of whether I applied them directly at folks on this board or not I’m being a prick when I describe folks that like linux or android using these terms.

How much civil discourse do you think would occur using these terms? What makes you think that anything but a tiny percentage of iPhone buyers are Apple fanatics anyway? Even when Apple was pretty much down to nothing but graphic artists and fanatics I doubt that annoyingly vocal fanatics were more than a tiny fraction of MacOS users.

Except that you would think that if that happened enough times, retailers would eventually sour completely on Android tablets, rather than doubling, tripling and quadrupling down.

It seems, based on the Touchpad, that the big vendors aren’t risking much but floorspace given they have avenues to return real stinkers. I’d risk the cost of creating the SKUs and floorspace for the Android tablets figuring they might eventually catch on. It’s not like Samsung can really afford Best Buy not stocking ANY of their other items if they let Best Buy soak off a huge loss. Best Buy not stocking any Samsung TVs and pushing LG instead is not a good trade for Samsung.

“Except that you would think that if that happened enough times, retailers would eventually sour completely on Android tablets, rather than doubling, tripling and quadrupling down.”

*I* wouldn’t think that, no. I think that retailers are always looking for the Next Big Thing ™ and most of them don’t have access to the iPad, so they’ve got an incentive to keep bringing in new devices until they find one that gets traction. But I’m not a retailer, so I don’t know for sure.

All I’m really trying to point out is that there are alternative, defensible theories. So even if your theory that high shipment rates imply solid sell-through is correct, I don’t think that conclusion is definitive. That’s all I’m really getting at…

As for Kindles and Nooks, they absolutely *don’t* contribute to the branding ecosystem – they’re not Android-branded and they’re not *allowed* to be Android-branded. They also don’t contribute to the Android software ecosystem, since those partners aren’t giving anything back. In Amazon’s case it’s even a full-on fork, from what I understand. And I’m not sure what it means to contribute to the hardware ecosystem – do the Nook and Kindle have new hardware that wasn’t previously supported by Android, but now isn’t?

The case of the Kindle is particularly egregious – not only does the Kindle *not* integrate Google’s services, it also muddies Google search tracking (thanks to Silk) and threatens Google’s “well, at least we’ll always have an open platform to run on” goals as well. (not in a fatal way, obviously, but it has to be a disturbing trend for Google – Baidu Yi really *does* have the potential to hurt Google’s adoption, both of branded Android and Google services, in China.)

Google considers an Android device to be one that activates with a Google account, which seems eminently reasonable to me. And they have more stringent requirements to brand a tablet with the Android brand. Kindle Fire and Nook don’t qualify on either front.

It’s like calling a Mac a Unix machine – maybe it’s *technically* true, but not in a useful way.

@nato
> The case of the Kindle is particularly egregious – not only does the Kindle *not* integrate Google’s services, it also muddies Google search tracking (thanks to Silk) and threatens Google’s “well, at least we’ll always have an open platform to run on” goals as well

And now Jon Rubinstein (who is a board member at Amazon) has left HP. Rubinstein was the former CEO of Palm, (think WebOS) and former Apple executive. Remembering that WebOS has been open-sourced, I think we’re about to see a 4th horse in the tablet race.

> It’s like calling a Mac a Unix machine – maybe it’s *technically* true, but not in a useful way.

I’m curious what you mean here. I’ve found it to be a perfectly adequate Unix machine.

@patrick: Each new tablet is a long shot to succeed, a calculated risk based on optimism. Companies will keep coming out with new tablets so long as they think (expected payoff if it succeeds) times (expected chance of succeeding) appears positive. Especially if they have an optimism bias, but even if they don’t. Retailers make a similar calculation with respect to the *chance* that the product might be worth shelf space for a little while, if only to get customers to come in and buy *other* products they see on the way in and out. Depending on what numbers you plug in, it’s perfectly conceivable you could have quite a long chain of failed products that barely sell and end up landfill for each one that “mostly sells”.

Given enough optimism on the part of contenders hoping to swing for the bleachers in an unlikely bid to unseat Apple, you could easily have, say, 10% sell-through almost indefinitely. Even companies that fail repeatedly will likely be able to come up with a story for why they just “missed their window” through some random chance or one-time mistake (a factory fire, a botched ad campaign, an ill-timed recession…) that certainly won’t apply to the next one. If they can afford to try again, they might well chalk the first effort up as a learning experience and try again.

So yes, the difference between “shipped” and “sold to consumers” can be HUGE and no, a rise in “shipped” doesn’t necessarily demonstrate an equivalent rise in “sold”.

So yes, the difference between “shipped” and “sold to consumers” can be HUGE

Agree.

and no, a rise in “shipped” doesn’t necessarily demonstrate an equivalent rise in “sold”.

Agree to a point, but I still think we have a big enough slope on the curve to show that something is really there. OTOH, until somebody like comscore starts tracking installed tablets, I’ll apparently wind up having this disagreement every quarter…

@Nigel:

> “That’s certainly a probability on AT&T (home of most Apple fans) and a distinct possibility on Verizon.”

Frankly, I’m not even sure that AT&T is home to “most” Apple “fans”, but am pretty sure that it is home to most Apple (handset) fanatics. There is a semantic difference, not just a niceness difference. If you absolutely had to have an iPhone no matter what, and gave up a contract on another carrier to switch to AT&T just so you could have an iPhone — to me that’s more than just being a fan.

> What makes you think that anything but a tiny percentage of iPhone buyers are Apple fanatics anyway?

Ummm, because apparently a lot of them had perfectly good iPhone 4 phones, but decided they needed an iPhone 4S anyway???

> I doubt that annoyingly vocal fanatics were more than a tiny fraction of MacOS users.

I didn’t say “annoying” or “vocal.” I think there are a lot of people who are incredibly passionate about their Apple iPhones who are neither. And I think the bulk of them in the US are still on AT&T.

> I feel I’m being a prick by pointing these things out but you seemed to genuinely be wondering why.

I’m often quite blunt, and sometimes type quickly and don’t rephrase. I certainly don’t mind if you point out the things I say that you think are bothersome, but actually, I was wondering what I said to one specific person that apparently caused him to go off in a huff, because I went back and looked and didn’t see it.

@nato:

As for Kindles and Nooks, they absolutely *don’t* contribute to the branding ecosystem

They do in the sense that most consumers know they are based on Android, so if they have positive experiences they might consider other Android devices.

They also don’t contribute to the Android software ecosystem, since those partners aren’t giving anything back.

If someone writes an Android app, they might be able to get it in the Amazon or B&N store without too much extra work. A consumer who buys one of those and uses a particular app will be happy to find exactly the same app on other Android tablets.

And I’m not sure what it means to contribute to the hardware ecosystem

Hardware is all about volume. That’s why Apple switched over to compatibility with the PC for Macs. The more vendors who ship Android compatible hardware, the more market there is for compatible processors that come bundled with drivers, etc.

So, as I mentioned, a Kindle might not contribute to the Android tablet ecosystem as much as an Asus, but I think it still contributes at least a little in all three of those categories.

It’s like calling a Mac a Unix machine – maybe it’s *technically* true, but not in a useful way.

Mac OS X is more Unix than Linux is Unix. It’s SUS-certified. (No, don’t go quoting that Master Foo thing at me; I’m aware of it and choose not to consider it.)

More to the point, it’s completely dominating the traditional Unix workstation market — science, engineering, and software development applications in particular — where previously Linux or another Unix would have found purchase.

We’re rapidly converging to a point where Linux on the desktop is only of interest to neckbeards. Traditional Linux distros (i.e., not horrid stinking messes like Ubuntu) are already there.

Hardware is all about volume. That’s why Apple switched over to compatibility with the PC for Macs.

Apple switched to x86 for Macs because the Intel chips started offering a vastly better performance-per-watt profile than did the PowerPC architecture.

Apple have historically been sticklers both for high performance and low power consumption; PowerBooks were regularly getting 3 hours battery life in an era when most Wintel notebooks couldn’t eke out 2.

I wish I thoroughly understood the business model of the carriers. It has never made any sense to me.

Me neither. In one very real sense, though, the cellphone carrier is in the same position as the airlines or as chip companies. The first seat on a flight, the first chip of a new design, or the first call made through a tower costs a lot. Subsequent ones, not so much. It’s really hard to do pricing with this model. It’s not scarcity, but it’s not quite the new economic model of zero cost either. The done strategy seems to be to extract as much from each individual as possible, and hope the total adds up high enough. Unfortunately, this is not really a science (it’s a lot to do with behavior, after all), and leads to some serious missed opportunities and misallocations.

@tmoney:

An off the cuff theory, how much are early contract renewals (and presumably the reduced churn associated with that) worth to a carrier?

A lot, I think. In the quarter immediately preceding the Verizon iPhone launch, AT&T pushed like hell to get as many customers as possible locked in on a new two year contract with the iPhone 4. But it seems that early contract renewals could be done on both Apple and Android.

And many iPhone customers can afford such a penalty because of the high resale value of used iPhones.

Yes, and the network earns back at least some of its incentive for the early renewal when the used phone purchaser also signs up (even though that won’t be a contract). OTOH, if the carrier tried to lock in an Android customer for another two years, the carrier could probably make it as financially appealing, because of the lower initial handset cost.

I imagine (though I certainly don’t have any hard proof at the moment) that such scenarios do not commonly apply to their android handsets

I absolutely agree. The whole premise of ubiquitous Android handsets does not bode well for their resale value.

I do have one other theory about why Apple handsets are more valuable to the carriers than non-Apple handsets. The combination of well-tested, well-supported hardware with a best-in-class manufacturer support network (Apple stores) means that the carriers probably get a lot fewer support calls on those. Seriously, if you have a malfunctioning Apple phone, are you going to call AT&T, or head to the Apple store?

I doubt think that comes close to explaining the entire reason for the increased subsidy, but OTOH, I wouldn’t be terribly surprised if it did. The way a big carrier like AT&T or Verizon allocates costs, it could appear that every single customer service call costs $500.

> Apple switched to x86 for Macs because the Intel chips started offering a vastly better performance-per-watt profile than did the PowerPC architecture.

You realize you’re making my point for me, right? That the volume of business available in the PC market led to increased competition and research that led to much faster improvements than in other markets?

• 9.4 million smartphone sales, best-ever quarter and 50 percent more than
previous quarterly record and nearly double 3Q11 sales; 82 percent of
postpaid sales were smartphones.
• 717,000 wireless postpaid net adds, the largest increase in five quarters;
2.5 million increase in total net wireless subscribers, with gains in every
customer category.
• Best-ever quarter for Android and Apple smartphones, including 7.6 million
iPhone activations.

7,600,000 / 9,400,000 = 0.808510638, which is 81%.

For Verizon you have to dig a bit more, since it was only revealed during the Q4 results conference call that the company actually activated 4.3 million iPhones during the quarter. The carrier also total smartphone sales of 7.7 million units during the call.

@Patrick> You realize you’re making my point for me, right? That the volume of business available in the PC market led to increased competition and research that led to much faster improvements than in other markets?

You realize you’re making everyone else’s point for us, right? That the PC industry was satisfied with what Intel handed out until Apple started showing how good things could be?

I categorically disagree that “most consumers know they are based on Android”. Not a chance.

However, I can see the argument for apps, especially in the case of the Kindle Fire. Nobody’s targeting the Nook, not really, but Amazon’s store certainly contributes to the overall Android app market, so I’ll agree with you there.

As for hardware, I don’t buy this argument, either. I’d bet money you could run Android on the iPad’s hardware, but that doesn’t mean the iPad is contributing to Android in any meaningful way.

All that aside, though, I can’t see that Kindle is good for the overall ecosystem. I think it’s a pretty dangerous precedent, honestly, and I can’t imagine that Google’s very happy about it…

My point *isn’t* that OSX isn’t Unix-y under the hood – clearly that’s the case. Just as the Kindle Fire is Android under the hood.

But I’d never count OSX installs as part of any “Unix market share” figures. Applications built for OSX aren’t easily ported to other Unices, Apple’s not contributing anything meaningful at this point to the Unix ecosystem (as far as I know), and, most importantly, the vast majority of Mac owners have no idea what Unix is, much less that it’s the underpinnings of OSX.

So, is OSX technically Unix-y? Sure. But I don’t find it useful to describe it that way – Macs are very much Macs, just as Kindles are very much Kindles, even if the Fire technically runs Android under the hood.

>Ummm, because apparently a lot of them had perfectly good iPhone 4 phones, but decided they needed an iPhone 4S anyway???

I don’t think that’s necessarily a sign of fanaticism, so much as a factor of high iPhone resale value (though admittedly fanaticism does play some part in this. I’ve seen plenty of people who have pretty much never paid more than about $50 net for the latest iPhone after their first purchase. But the only way to successfully work that out is to be willing to dump your perfectly good iPhone 4 on the same day that the 4s becomes available. If you’re the type of person that always likes to have the latest and greatest and you like the iPhone, then this is a perfectly reasonable way to go, no fanaticism needed.

>But it seems that early contract renewals could be done on both Apple and Android.

Sure they could, but it’s a matter of whether they will be. The guy that holds out to buy the $50 or $99 low end android and buys the cheapest plan he’s allowed to get is not very likely to be willing to pay to upgrade early on top of a non or only lightly discounted replacement phone,

>Yes, and the network earns back at least some of its incentive for the early renewal when the used phone purchaser also signs up (even though
>that won’t be a contract).

Depends, that’s probably true for AT&T where you can walk in and get a prepaid SIM card, but I doubt it’s true with Verizon and now Sprint where activating the device on the network requires specific carrier knowledge of the device. No one’s letting you put a smart phone on without a data plan.

>I doubt think that comes close to explaining the entire reason for the increased subsidy, but OTOH, I wouldn’t be terribly surprised if it did.
>The way a big carrier like AT&T or Verizon allocates costs, it could appear that every single customer service call costs $500.

That’s actually a very good thought on it too. When I sold the iPhone I HATED having to do support for AT&T’s problems, but it’s pretty much impossible to convince a customer that you sold something to that it’s not your fault when it doesn’t work. I imagine this is about a thousand times worse for carriers who are often the only “face” of LG or HTC that a customer will ever find. I know I would have paid good money to have a real AT&T rep available when doing my end of support, I can’t imagine what being able to say “Take that to the Apple store” is worth to the carriers. Of course the flip side, of that is Apple is more likely to hold the carriers to the fire when it is their problem. I can’t tell you how many customers I had to send back to AT&T (after of course calling the local AT&T store, talking to the manager and ensuring that a rep would be there when the customer got there that knew what was going on) to solve what was clearly an AT&T problem that the AT&T rep simply passed off as hardware, probably in hopes of keeping his service times down. I imagine with other vendors AT&T just has the device replaced through warranty or insurance channels and hopes the problem goes away, or the customer assumes its normal when their new device has the same problem.

> If you’re the type of person that always likes to have the latest and greatest and you like the iPhone, then [buying new one/selling old one] is a perfectly reasonable way to go, no fanaticism needed.

I can buy that, but one of the articles I pointed to earlier said that a lot of iPhone upgraders weren’t getting rid of their old phone.

Or, to be perfectly pedantic, we simply don’t know whether activations are sales or not, but at least some of us believe that if they were, AT&T would use the same word and not consistently refer to “activations” in the context of “iPhones” and “sales” in the context of “smartphones.”

How can you possibly quote directly from both AT&T and Verizon and not realize that the word “sales” and the word “activations” are not necessarily synonymous? (If you find something that indicates they are, please share.)

“Apple’s not contributing anything meaningful at this point to the Unix ecosystem…”

As tmoney and Bryant pointed out, they are. Apple is perhaps not quite as virulently opposed to the GPL as Microsoft (but enough so that they seem to view CLANG/LLVM replacement for GCC as imperative), and is significantly different from Microsoft in that they have much less NIH and little to no objection to permissive OSS licenses where they make sense (for example, when they can hire a primary developer of a great package). I wrote a bit more about this several months ago:

Patrick Maupin: “Seriously, if you have a malfunctioning Apple phone, are you going to call AT&T, or head to the Apple store?”

Another anecdote: In Utah, there is exactly one (1) Apple store and it’s not convenient to where I live, but there are lots of AT&T stores. When my genuine iPhone Apple wall charger failed to work, I tried to get relief at the AT&T store, and they tried to fob me off on the Apple Store. Long story short, a phone call to the AT&T regional office resulted in the AT&T store manager delivering a replacement charger (not an Apple branded charger) to where I worked, for no charge. Not sure if this is typical, but the AT&T store guys assured me there was nothing they could do about it. Of course, there was, but not with actual Apple product. I’m still an AT&T customer, but now with an Android. I love happy endings.

I categorically disagree that “most consumers know they are based on Android”. Not a chance.

Why do you think that? If you do any research at all on either tablet, you will know this. But maybe I didn’t qualify my statement enough. Most consumers of those devices (you know, the people who might be swayed to look at other Android devices based on their e-reader experiences) know they are based on Android.

However, I can see the argument for apps, especially in the case of the Kindle Fire. Nobody’s targeting the Nook, not really, but Amazon’s store certainly contributes to the overall Android app market, so I’ll agree with you there.

The question isn’t whether the nook runs most android apps. The question is whether most nook apps run on stock android. I’m not arguing that android leads to nook, rather that nook might be a gateway drug to android.

As for hardware, I don’t buy this argument, either. I’d bet money you could run Android on the iPad’s hardware, but that doesn’t mean the iPad is contributing to Android in any meaningful way.

The point is not really whether or not you can run the software on the hardware. The point is whether the software and hardware each symbiotically lead to the advancement of the other. This is happening with Apple’s hardware, but of course they aren’t going to sell their CPU on the open market.

All that aside, though, I can’t see that Kindle is good for the overall ecosystem. I think it’s a pretty dangerous precedent, honestly, and I can’t imagine that Google’s very happy about it…

It’s a two-edged sword, to be sure. But ask youself: if a consumer is choosing between a Kindle Fire and an iPad (which, according to several reports, is a decision that several consumers make, while of course other consumers will simply buy both), which would google prefer they pick?

But ask youself: if a consumer is choosing between a Kindle Fire and an iPad (which, according to several reports, is a decision that several consumers make, while of course other consumers will simply buy both), which would google prefer they pick?

Unclear. The iPad has a better web browsing experience (bigger screen, faster processor, better browser) and is seen as more of a general-purpose computer; consequently iPad owners are likely to spend much more time browsing the web than Kindle FIre users. And the iPad doesn’t even (yet?) have Siri with its wolfram alpha/yahoo/whatever integration; iPad users mostly use google for search. In summary, Google is likely to directly profit much more from a consumer who buys an iPad, because that consumer will see more Google ads.

> If you believe that Apple’s support for LLVM is all about licensing, then you know very little about LLVM.

It’s absolutely not all about licensing. But if you think Apple is not interested in using LLVM in scenarios where they don’t have to open their kimono and show the world what they are doing, you’re the one who knows very little about the LLVM and Apple situation.

@Glen Raphael:

> Google is likely to directly profit much more from a consumer who buys an iPad, because that consumer will see more Google ads.

Sure. I could be wrong, but I think google tries to look farther ahead than next quarter.

Larry Yelnick writes: “That the PC industry was satisfied with what Intel handed out until Apple started showing how good things could be?”

I’ve been wondering if Yelnick has been living in the same timeline that I’ve been living in for some time now. This line sorta solidifies the impression. Evidently, in Yelnick’s timeline, Apple never got tired of Motorola’s failure to innovate in processors and shifted to Intel … and AMD never created a competing Intel-compatible line…

this restriction will not apply to the content of the work when distributed in a form that does not include files in the .ibooks format generated using iBooks Author. You retain all your rights in the content of your works, and you may distribute such content by any means when it does not include files in the .ibooks format generated by iBooks Author.

A million installs is certainly not a million people and especially not for the type of “grognards” who install CM. I have been installing CM since version 1 on my G1, and I account for at least 20 of those installs on my various devices over the years. At that ratio, a million installs is only 50,000 users. Tiny by smartphone market standards.